In case you missed it, the weekend flagship covered the Asian Life market - specifically AIA (1299.HK) and Ping An Insurance (2318.HK). Check it out via the link below 👇:

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Gradually…

The cash-heavy BUSHY™ lagged the S&P again last week but another week of gradually closing the gap with its end of February high water mark.

Before we get to the portfolio review, we need to discuss some further portfolio additions - modest ones, the Strait is still shut after all….

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In case you missed it, the weekend flagship note came out on Friday morning. In it we launched our refreshed basket of European defense stocks.

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Pulled back into the Pack

The month-do-date finviz risk board (below) is not really what the 🐿️ wanted to see having de-grossed so aggressively (ex-Energy) starting in mid-February.

Even with another significant mark down week for the hedge book, BUSHY™ managed to add 29bps for the week.

We will come back to the portfolio review after going through some immediate ‘Start the Week’ action items:

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Am sending out this note early as it was written before the breakdown of the Islamabad talks.

In case you missed it, the flagship note this weekend focused on global opportunities in the world of closed-end funds.

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In May 1993 - roughly eight months after even multiple hikes (to a back-breaking 15% policy rate) could not prevent Sterling from crashing out of the ERM on “Black Wednesday” - a BBC journalist asked UK Chancellor Norman Lamont which he regretted more - prematurely claiming to see “green shoots of recovery” in the UK economy a few months earlier (amid a rough ongoing recession) or “singing in his bath”.

This was a tabloid reference to him reportedly belting out show tunes through the soap suds while the ERM crisis unfolded. Lamont’s deadpan retort - “Je ne regrette rien”. Lamont took a lot of flack for that. Not deterred, the🐿️ is also going to channel his inner Edith Piaf this weekend.

The BUSHY™ ‘beta’ portfolio lost 4bps while its Vanguard target date benchmark advanced 3.47% on the back of last week’s ceasefire / ‘Mission Accomplished’ rally.

This is what will happen to a portfolio when you have cut significant length in equities without making corresponding cuts to the hedge book. The Strait is still not freely navigable. No regrets. The risk / reward of piling into risk assets so close to all time highs with the current backdrop feels poor.

Before we get to the weekly portfolio reviews, I want to follow up on the execution plan for those closed end funds.

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In case you missed it, the weekend note was a deep dive (in collaboration my podcasting partner Benny) on the SpaceX IPO and its broader implications of this jumbo transaction on markets.

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BUSHY™ is still in the process of slowly clawing its way back to the beta portfolio’s YTD high water mark set in late February. Having de-grossed aggressively (starting mid February), it is not surprising that we underperformed during last week’s strong rally in risk assets.

Quite comfortable staying underweight risk. At risk of repetition, the portfolio will stay that way until the Straits of Hormuz are re-opened. I see no upside in being tempted to jump the gun.

BUSHY™ closed Q1 +8.43% - 9.57% ahead of the Vanguard benchmark and 13.07% ahead of the S&P 500 - adding 18 bps in the first 2 trading days of Q2.

BUSHY™ and Acorn Review

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In case you missed it, I used the weekend note to look beyond the Iran war and the investment opportunities related to ruggedizing Australian’s sovereign resilience. Am pleased to say that I under-promised and over-delivered on getting out this ‘Start the Week’ note ahead of the ASX open on Monday.

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In the context of another tough week for risk assets (outside of energy and precious metals), BUSHY™ eked out a positive +0.37% return for the week.

Pretty happy with that (although the portfolio is still well below the high water mark set in late February). Full BUSHY™ and Acorn review after we lay out the specifics of our…[drum roll please]…

‘Straya Ruggedization Basket

As mentioned in the weekend note, we are still in ‘shopping list’ mode here at Blind Squirrel Macro. The construction of our ‘Straya Ruggedization Basket (‘SRB’) falls into that category. Strapping on a bunch of risk here - however sound the thesis - does not make a great deal of sense while the Strait is still closed.

Let’s start with what is NOT going into the SRB. The 🐿️ was guilty of pulling up the charts of Santos and Origin Energy as semi-direct plays on the Aussie LNG export angle when hostilities in the Persian Gulf broke out. But this rodent does not fight governments.

There are easier energy plays around the world. For example Canadian E&Ps now have wind at their back (with government and ‘Maple 8’ backing) in support of their energy export ambitions. By contrast, the Gladstone LNG complex is most likely facing margin headwinds from Canberra’s energy security policies in the coming years.

Lynas is indeed a tailor-made play on the US defense supply chain plus Japanese capital theme. However, the risk / reward here does not meet my requirements. LYC is up 160% since last summer and already trading at over 9x FY28 revenues with plenty of execution risk in Texas ahead of it. Arguably its chart still makes a bullish technical case but way too much fundamental risk for me.

The small / micro-cap (single project) opportunities I touched on in the Saturday note (Strike Energy, Ardea Resources, NeuRizer and International Graphite) are really for the gambling class - well, you know who you are!

The SRB Framework

Much of Australia’s ruggedization capex drive needs to be built around existing in-country expertise and regulatory frameworks. I was looking for listed companies of reasonable substance and scale that are well positioned to be focal points for investment under the “Future Made in Australia” framework.

For me, the low-hanging fruit falls into 3 categories:

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In case you missed it, I used the weekend note to re-underwrite each position in the Acorn short book. In a world in which maintaining length in risk assets seems like a dangerous pursuit, a short book is an important insurance policy 👇.

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PSA🚨: Blind Squirrel Macro has been de-grossing for well over a month. Making money on the portfolios’ hedges in January was ‘the tell’ for the 🐿️. I think we are now at the stage that every single day that the Strait of Hormuz is closed you should sell some more long positions. That’s what we will be doing.

Sunday night update (Monday late morning my time): This futures open looks SPECTACULARLY COMPLACENT. Act accordingly.

Listen, I get it: “What if it all blows over? Risk assets will rip and I will be playing catch-up for the rest of 2026!”. Simple. Take out some FOMO insurance.

We are already running out of diesel here in Australia. The government is talking about fuel rationing plans that could be in force in the next few weeks. I need to fly up to Asia at the end of the month. Fuel surcharges are one thing - I am more concerned about outright flight cancellations.

Australia refines approximately 20,000 barrels per day of conventional jet fuel domestically. This meets less than 20% of the country’s aviation demand - the rest comes from international imports. These are not currently flowing. I live a long way away from most places - planes that fly down under do not have enough in the tank for the journey home…

Unsurprisingly, the airline sector has shed almost 30% of market cap since late January - well before the time that the missiles and drones started flying. Are listed airlines potentially the ultimate de-escalation trade?

What if for every few percentage points that you take down your net long exposure you add a ‘right tail’ of airline upside? You can buy 15% delta calls on - the airline ETF - for 37% implied vol. Basically pennies. An inexpensive way to dull the FOMO. Link to OptionStrat payoff model via the image below.

I will have discussed this in more detail with Benny on the Sunday show (never miss one!) but at least you are getting this before the calls open for trading!

BUSHY™ and Acorn Review

The beta portfolio lost 137bps on the week - now +7.37% year to date. We are going to be eating our own cooking. More pink tickets for BUSHY™ this week.

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In case you missed it, ‘Farmer Squirrel’ (in collaboration with ) published a new piece - with no paywall - on current opportunities in corn, cotton and wheat markets triggered by the Hormuz Crisis. Check it out 👇.

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The 🐿️ is a ‘kid of Fukuyama’. I left school in 1989. That summer, Francis Fukuyama’s original essay “The End of History?” was published in The National Interest. I was a teenager waiting tables in London to save for a pre-university tour of South America when the news of the fall of the Berlin Wall came through on the radio of the restaurant kitchen.

By the time Fukuyama’s essay had become a book - The End of History and the Last Man (1992) - I had completed my first internship in the European research department at Cazenove, a London stockbroking firm (now part of JP Morgan). Communism and fascism had been comprehensively defeated. There was no politico-economic belief system that could rival liberal democracy. We had reached history’s ‘telos’ (endpoint).

It’s been a pretty rough decade for us kids of Fukuyama. We spent 20 years patting ourselves on the back before the cracks - the GFC, opioid crisis, 2016 populism eruption etc. - became impossible to ignore. As for the core tenet that economic liberalization spawned political freedom? LOL!

The ‘triumph’ of Western liberal democracy has collided with a messy multipolar reality. Instead of our free-market utopia, we now have the return of state-directed industrial policy and the weaponization of global trade.

The geopolitical architecture we spent our careers taking for granted - anchored by a hyper-financialized Pax Americana - is being systematically dismantled. Frankly, the overt grift is pretty sickening too.

For a macro rodent conditioned by the post-Cold War peace dividend, this regime shift demands a rewiring of mental models. The world of perfectly optimized supply chains and structurally suppressed inflation (and volatility - this is even more important) is over.

Turns out that history didn’t end in 1989 after all. It just went on a long sabbatical, and is now back with a vengeance to remind us that hard assets and ‘just in case’ supply chains are pretty much all that matters.

The ongoing war in the Middle East has accelerated a major de-grossing of the BUSHY™ beta portfolio and the Acorn book that was already well underway. It started in early February. If the conflict ends up with $200 oil tipping the global economy into a recession, that risk cut was insufficiently aggressive.

It turns out that my bias towards relative economic winners in a multi-polar world actually needs someone to win.

That said, BUSHY™ only gave up 0.18% last week - OK during a pretty rough week for risk assets. The numbers look great versus benchmark and the S&P but you can’t eat relative performance. It’s time to pull the drains up!

Will do our weekly review of that portfolio and of the Acorn positions after completing the unfinished business from yesterday.

New “Malthus Ag Trade” Implementation

When thinking about structuring the “Revenge of Malthus” Ag basket, this weekend’s US attack on Kharg Island focuses the mind.

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I know that there is a ton of 🐿️ in your inbox in past 24 hours. I am sending the ‘Start the week’ note you early as it is (i) ready and (ii) there are lot of portfolio changes (including in Asia) to absorb.

In case you missed it, the weekend note tackled the ailments facing emerging market tech stocks. An EMQQ post-mortem! Check it out.

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What a week! I thought I had done an extensive job of de-grossing the portfolio over the course of February. Sometimes, you can never sell enough.

Quick PSA for subscribers: a lot happened last week and I was updating members in The Drey in real time (e.g., closing hedges and adding to the de-grossing list).

Easy joining instructions: 1. Hit the button below (which takes you to the The Drey’s waiting room on Discord; 2. Reply to this email with your Discord username / handle. Easy!

It's about time I joined The Drey!

2026 had been way too easy so far. A punch in the nose felt completely inevitable. I felt that I was pretty defensively positioned going into last week but a 258 basis point drawdown in my BUSHY™ beta portfolio (plus some Acorn gut punches) really stung!

Last week was pretty active. Further de-grossing. Let’s dig in.

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In case you missed it, the weekend note grappled with a key ‘battleground stock’ in the current SaaSacre™ - Adobe. The 🐿️ probably managed to upset everyone! Check it out.

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The BUSHY™ beta portfolio closed the month +11.95%1 on the year. I am going to refrain from making any commentary on the weekend activity in Iran or guess as to the likely impact on the portfolio.

We have plenty of energy and gold exposure at the moment. We are also very defensively positioned currently, with a high cash balance and plenty of hedges. More on that later.

In Benny and my conversation with a couple of weeks ago, we discussed how equity supply (in the form of ECM placements and IPOs) was typically the reason that bull markets in Chinese equities come to an end. Bankers get blamed for everything these days…

A surge of IPO activity in the US is typically a signal that we are getting close to a local top in markets. 2021 worked a treat on that front. However, this is more of a sentiment signal than a law of physics.

The reason for this is that the impact of share buybacks and companies being taken private (corporate and PW M&A) reduces the supply of equity by a much greater number than can be replenished by bunch of ECM bankers in New York.

I think that is all about to switch in to reverse gear.

In the weekend note on Adobe we touched on the fact that a great deal of buyback activity in the SaaS sector was necessary to ‘sterilize’ the dilution resulting from large scale issuance of stock-based compensation (a traditional 🐿️ pet peeve).

Traditionally, buybacks overall remove a large chunk of stock supply from the market every single quarter once those blackout periods close.

Block’s announcement last week that they will be firing 40% of their employees has implications for share supply. Yes, fewer shares will be issued as SBC in the future but I would hazard that (i) this will not be the last of this type of restructuring; and (ii) the volume of shares from departing employees (from Block and elsewhere) hitting the market to pay back student loans, mortgages and school fees is about to rise sharply.

Of course, ‘white collar’ job losses also slow the pace of 401(k) savings hitting those index funds every month.

Plenty of ink has been spilled on the topic of AI data center capex by the hyper-scalers. In addition to crowding out credit markets to fund this spend, budgets for share buybacks will have to be shrunk aggressively.

On a related matter, and with what seems to be impeccably poor timing, those NY ECM bankers are lining up one of the largest cohorts of jumbo IPOs seen in history.

By the way, if you want a framework for how to value the space part of SpaceX (xAI is probably a liability!), I had a go in October 2024 (when the insatiably bullish Adam Jonas was estimating the entire space revenue TAM at $1 trillion by 2030):

Even if SpaceX only floats 5% of its equity at Elon Musk’s bogey / fantasy / ‘whatevs’ valuation of $1.5 trillion (only 150% of 2030 space revenue TAM!), that $75 billion deal will be 3 times the size of the Saudi Aramco IPO in 2019 that required the significant support of pretty much every sovereign wealth fund on the planet (as well as some significant ‘national service’ by local princes in Saudi) to get over the line.

SpaceX / Anthropic / Open AI and their advisers are clearly already sweating about sources of demand for all that paper. And they are pulling strings. The Nasdaq 100 index committee recently issued a consultation document proposing rule changes that would get these deals fast-tracked (with generous treatment around free float inclusion factors) for these jumbo new arrivals.

This would effectively allow these companies to sell vast quantities of unseasoned shares directly to the passive owners of the $400bn and any ETF or structured product (a lot!) benchmarked to the Nasdaq 100 index.

Thanks again to “Captain Passive” himself, , for highlighting the issue last week just in time for me to be able to comment ahead of the 27th February deadline. You can find a copy of my letter via the linked tweet below.

I stirred up a few former ECM luminaries to do the same including who took Amazon public almost 30 years ago. A great story that he shared with me last May.

And my pal Craig Coben with whom I picked apart the impending Coreweave IPO a year ago.

Craig went one better than my letter and penned this excellent column for the Financial Times. Flex! It is an piece so free to read for non FT subscribers (link via image below).

Craig makes a couple of brilliant points that I did not cover in my letter. The FT’s picture editor deserves the picture editor equivalent of an Oscar for that cover image!

Retired senior bankers ranting about fairness in markets is one thing. Let’s get back to the physics. Assuming even just a handful of these jumbo gets out, US markets have never been tested with such extreme supply.

An average large year for US IPOs of operating companies (ignore the SPACs and funds) is $50-60 billion of proceeds (apart from that brief moment of lunacy in 2021 when the ‘wisdom of the crowd’ dictated that Rivian was worth $100 billion - fully diluted market cap post its day 1 ‘pop’).

Stuffing the passive funds (via deal focused hedge funds warehousing allocations) will help those ECM Syndicate but I am not sure that it is going enough. The full suite of retail brokers will be lined up to help. Your phones will be peppered with texts from Robinhood, SoFi et al offering “exclusive” access to IPO stock.

I am old enough to remember when it was considered ludicrously irresponsible to put more than 5% of available shares in a US IPO down retail channels. Heigh ho.

Most of my smart readers will either studiously avoid those texts from Robinhood or play the ‘flip to passive’ trade. Word of warning - if everyone thinks there is an arbitrage, that arb tends to close fast!

More worrying for me is that these deals are launching just as the de-equitization props of share buybacks, 401(k) inflows and M&A bids from cashed-up PE funds are being removed from the market (they cannot raise funds after torching too much capital on SaaS LBOs).

The rodent would contend that the result of dropping $75 billion of SpaceX paper (plus the rest from OpenAI, Anthropic etc. etc.) at a concept valuation on top of that building above could have some fairly unpleasant consequences. What’s more none of those newly public companies are buying back stock any time soon.

Another reason to favour ex-US equity allocations. Go where the paper is in shorter supply! Not rocket science (sorry).

BUSHY™ and Acorn Review

Back to regular scheduling. Last week was kind on BUSHY™ but we brace for how markets to react to weekend’s Iran news when they open on Monday.

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In case you missed it, in the weekend note which hit inboxes on Sunday morning, the 🐿️ launched the ShinyAcorns™ portfolio - our basket of precious metals miners for 2026 and beyond. Make sure you check it out before reading on as we will start this week with the implementation plan for the basket:

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Also a quick head-up that John ‘JJ’ Johnston aka ‘’ joining us on Benny & The Squirrel on Thursday. JJ is a veteran futures trader and was trading gold in open outcry markets before the 🐿️ was born. He is full of trading wisdom and amazing stories. Given the topic of the weekend note, it’s a perfect time for us to have the chance to speak to him.

Oi! Did you Spill my Pint?

BUSHY™ trailed benchmark and the S&P this week. We made a couple of changes this week (raising cash). All details in the weekly review below. Current risk markets are looking to this rodent like that aggressive drunk in the corner of the pub that just accused you of knocking over his beverage…

ShinyAcorns™ Implementation

As mentioned in the quick video at the end of yesterday’s note (reposted below), most of the charts have had 45+ degree runs up and to the right over the past year.

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In case you missed it, in the weekend note which hit inboxes on Sunday morning, the 🐿️ assuaged a nagging concern that the portfolio’s African exposure was simply gold mining beta in disguise:

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A decent week for the 🐿️’s BUSHY™ beta portfolio. The fact that the hedge book is now creating a small drag on returns gives me some comfort that those positions may help in the event that the market moves against the portfolio’s core biases.

Plenty in the BUSHY™ and Acorn reviews this week - more additions to the hedge book; replacing uranium; reaction to the VAL/RIG offshore merger; what to do about Tencent; and managing the Korea ‘parabola risk’.

First, I wanted to do a quick review of headline macro risks. Those rodent whiskers are twitching again…

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The ‘start the week’ note is so much more than maintenance this week. STW is stuffed with fresh ideas. A big uranium rethink (with some schmuck insurance). Plus important changes to BUSHY™ and Acorn books - with 3 new highly convex trades. On a Monday!

In case you missed it, in the weekend note which hit inboxes on Sunday morning, the 🐿️ attempted to get in the head of Ivan Glasenberg, the retired CEO and largest investor in Glencore:

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A solid week for BUSHY™ beta portfolio - more than erasing the drawdown in Week 4.

Before we go to the full BUSHY™ and Acorn review (there have been a number of important changes), I want to spend a minute reflecting on my positioning in the nuclear / uranium trade. The 🐿️’s whiskers are twitching.

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In case you missed it, the weekend note which hit inboxes on Sunday morning covered an interesting opportunity in the agriculture / food space. It involves a name from the 🐿️’s past that created an element of PTSD by proxy!

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To a certain extent, after such a strong start to the year, BUSHY™ was overdue for a pull back. The 🐿️’s beta portfolio gave back 52bps on the week.

The damage largely came from precious metals exposure, the CTA allocation (they were long metals too!) and a left field mugging by the MSCI in Jakarta (more on that later).

Notwithstanding, the portfolio continues to hold up well against the Vanguard ‘Target Date’ benchmark and the suite of Multi / Real Asset ETFs that I track.

My inbox is stuffed full of hot takes on Friday’s sell off in precious metals and the Warsh appointment to the Fed. I do not have a strong view on the latter at present. Suffice to say, some of the breathless narrative about the new Chair’s plans reminds a bit of the Wall Street cheerleading around Bessent’s “3-3-3” economic plan.

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A combined note - we have a long weekend to mark the end of the southern hemisphere equivalent of that mid-June to late August period in Paris - and the 🐿️s are on the road in the Blue Mountains of New South Wales.

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Precious metals, emerging markets and energy equity strength drove a Week 3 of solid outperformance by BUSHY™ versus benchmark and the S&P 500.

BUSHY™ has now added over 11% in excess of benchmark since the beginning of 2025, with significantly reduced volatility and smaller drawdowns.

The normal BUSHY™ and Acorn portfolio review will follow below but I first wanted to expand my thinking on the unravelling of the software world over the past 3 months.

Last weekend, I flagged an old blog on the topic of SaaS “compression” by my podcasting partner Ben’s old friend, Sachin Dev Duggal, founder of SeKondBrain.AI. It turns out that the SaaS ‘compounders’ weren't compounding utility - they were really just compounding administrative bloat and keeping IT consultants busy!

Ben and I had been planning to interview an experienced power / energy trader at the end of last week. However, time zone clashes and an important PJM auction got in the way. Instead, we decided to take advantage of the fact that Ben was in Dubai with Sachin and that it would be hyper-topical to get him on the show.

We spent the most fascinating hour with Sachin - incidentally please do subscribe to his blog or follow him on LinkedIn - I learned a ton! The full show is up on YouTube but one of the segments most relevant to this (and last) week’s piece is clipped below.

The 🐿️ had an agenda! I wanted Sachin’s help in refining my basket of SaaS shorts! It’s time for the ‘Sachin Screen’!

Nuance is required. Some SaaS business are under serious threat from developments in AI. Some businesses could end up doing much better! A perfect scenario may have been created that long/short equity investors and traders can take advantage of. Let’s dig in.

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The weekend note hit inboxes on Sunday morning and revisited the trade in Japanese Banks. Link below in case you missed it.

My pal ’s brand new Japan-focused research service, , published their debut weekly note overnight. For those looking for racier plays (i.e., smaller & cheaper regional banks) in Japanese financials, Mateen and his team have done the work. Strong recommend!

Due to the MLK holiday and Ben’s travel schedule, Benny & The Squirrel we will record our ‘Sunday show’ late on Monday night EST - you will have pre-open on Tuesday.

Yes, it is still too early in the year for portfolio return stats to be meaningful, but BUSHY™ benefited from a solid ‘Week 2’ of 2026.

BUSHY™ now has over 10.8% of outperformance versus its ‘classic Big Retirement’ benchmark since I started sharing BUSHY™ with subscribers at the beginning of 2025.

The normal BUSHY™ and Acorn portfolio review will follow below but I first wanted to spend a bit of time returning to a theme that the 🐿️ has been fixated on for quite some time.

We are returning to the topic of…

The SaaS Suck!

In the middle of last week, I shared this Koyfin screen in The Drey (members please DM me if you would like a link to shareable watchlist). This is a universe of just under 100 single country, regional and sector ETFs that I track every day.

The scatter plot illustrates YTD performance for the group versus a simple forward PE (NTM) metric.

My initial observation was that cheaper, short duration assets were faring much better than more expensive sectors and markets year to date (I cut off the PE multiple axis at 35x PE (NTM) for legibility - hence no biotech!). The next thing that jumped off the screen was the weakness in software stocks.

The WisdomTree Cloud ETF has been a regular feature of my short book for much of the past 18 months. It is a one-stop shop for excesses in voodoo accounting, high levels of stock-based compensation and idiotic valuations.

WCLD operates for me as a form of low volatility, equal-weight exposure to ‘SaaS beta’ - a sector that I see getting de-rated massively in the coming years. It has been a pretty decent ‘funding’ short but I now think the dam has finally broken. We have reached a ‘common knowledge’ moment with this sector. Let’s dig in.

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Last night, subscription costs for new subscribers went up to US$45 per month (with a generous discount for annual subscribers that will reduce next week). Existing subscribers are grandfathered at their existing rates. Unsure of what is on offer behind the 🐿️ paywall? Hit the button below and check it out for free for 7 days!

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The weekend note hit inboxes on Sunday morning and focused on the 🐿️’s overall positioning in Chinese equities. Link below in case you missed it.

With bank earnings front and center this week and with Donald Trump morphing into a one man stand-in for the same Consumer Finance Protection Bureau that he dismantled, do make sure to catch up on the conversation that Benny and I had on Thursday evening with Charlie Peabody.

Charlie, Founder of Portales Partners, is calling time on the recent big move in US financials and thinks that they lead the broader equity market lower (with ‘Big Tech’ already losing momentum). Full conversation 👇

Too Early to Keep Score

I always try not to read too much into market moves in the first several trading days of the year but Benny and I had a go at doing so in this week’s Sunday night live show. Check it out!

We discussed this weird set up we have experienced in the first 6 trading days of 2026. Notwithstanding a stronger dollar and higher energy prices, emerging market equities have outperformed the S&P 500 by 2.7%.

I remember placing my first ever PA trade as a junior banker. In those days you simply walked up to the relevant market maker in the dealing room with a ticket. No compliance approvals, no paperwork. My blue ticket that cold January 1995 morning in London was for some warrants exercisable into shares of the Templeton Emerging Markets Investment Trust. Here is the full story. It’s a fun one.

Here is a closer look at that chart I created for the show trying to determine how valuable a signal was given by a strong January for the full year for emerging markets. The slope of the trend line below was certainly ‘flattened’ by the MEGA year for EM in 2009 and by the 2020 data point that was skewed by China reacting to Covid much faster than the rest of the world.

Regular readers will no my bias here. Unlike Benny, I do believe that this dollar strength is likely to be short-lived and that we are looking at a continuation of EM outperformance in 2026 (hence the - probably overdue - increased China weighting within BUSHY™ I discussed in the weekend note). My eye is on the 2003 onwards analog.

BUSHY™ and Acorn Review

6 trading days in to the year is of course way too early to start keeping score. However, the rotation in markets has certainly suited the BUSHY™ portfolio.

International equity outperformance, continued strength in precious metals and a quiet (for now) fixed income market has seen the beta portfolio get off to a flying start versus its benchmark.

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A final reminder to free subscribers that subscription costs for new subscribers will be rising to US$45 per month (with a generous discount for annual subscribers) at the end of this week. Existing subscribers are grandfathered at their existing subscription rates. Unsure of what is on offer behind the 🐿️ paywall? Hit the button below and check it out for free (as well as lock in the current rates if you like what you see)!

Take a Free 7 Day Trial

We all start at Zero!

Just a quick one this week. In the weekend note, we covered lifted the hood on the 🐿️’s Latin American exposures. Link below in case you missed it.

This morning Benny and I recorded the first episode for 2026. He is in Medellin at the moment. The audio gets much better after 2 minutes so stick with it - I think it was one of our best. Full show notes are in your inbox.

BUSHY™ and Acorn Review

Starting on January 1st with zero runs on the board is the lot facing anyone managing a P&L. The inevitable correction in the metals after Christmas cost BUSHY™ about 1.5% of performance in the last few trading days of 2025, but the first trading day of 2026 on Friday clawed back most of that deficit and the closed “Week Zero” up 130 basis points. International exposures helped. I hope this sets the tone for the year.

ETF Level Performance

Below are the year-to-date and full year numbers for the BUSHY™ ETFs.

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Merry Christmas and Happy New Year to you all. Time to reflect on some important portfolio tweaks as we look ahead into 2026. A combined note this weekend. It’s BUSHY™ rebalancing time.

Normal podcasts will resume in January but if you want to catch up with some 2026 outlooks from the 🐿️ and some of his favorite market commentators, look no further than The Market Huddle Holiday Special. Your favorite rodent joined ‘Part 2’ 👇

The funniest thing about this series of short interviews (which were recorded only a couple of weeks ago) was just how out of date the price commentary around precious metals sounded. It has been a big fortnight for the lovers of shiny rocks. We discuss portfolio implications (with respect to precious metals allocations) below.

Given that it aired at 8am Hong Kong time on Boxing Day morning, I am assuming that most ALL of you missed me live on CNBC’s Squawk Box Asia. Here’s a snippet! A quick overview of the 🐿️’s outlook for 2026.

BUSHY™ Year in Review and Rebalancing

I want to start by taking a step back on BUSHY™’s performance for 2025. I will rerun the numbers below for the calendar year end. However, with 3 trading days left in 2025, the numbers for the 🐿️’s beta portfolio are set out below.

BUSHY™ is not designed to try to ‘beat the S&P’ or indeed its benchmark, the Vanguard 2035 Target Date Retirement fund (VTTHX). But it gives a nice warm and fuzzy feeling in The Drey when it does.

To riff on The Italian Job, BUSHY™’s intention is not to “blow the bloody doors off” - BUSHY™ is a fully signed up member of the “self-preservation society”! The ethos behind BUSHY™’s self-preservation is diversification and managing drawdown risk for what represents the bulk (70-75%) of my investment accounts.

BUSHY™ has returned 25.45% year to date with 8.26% annualized weekly volatility (vs. 21.4% for the SPY and 10.6% for VTTHX). The largest drawdown of the year was less than 5% (recovering its high water mark within 7 weeks) with the portfolio’s average monthly excess return (versus 1-year US Treasuries) grinding away at 1.6%.

BUSHY™ exhibited a low (0.58) correlation with S&P 500 weekly returns and had positive returns for 39 of the 52 weeks of the year. This week was in fact the best week of the year (thank you to ‘pet rocks’ and some chunky year-end ETF dividends). The 🐿️ is no fan of Sharpe ratios but I do care about drawdowns and downside volatility - as such, am delighted with BUSHY™’s 3.85 Sortino ratio.

BUSHY™’s volatility profile is what gives the 🐿️ license to probe further out the risk spectrum with the ‘Acorn’ positions. Aside from the VTTHX benchmark, I keep a close eye on a number of ‘multi/ ‘real’ - asset comparable ETFs. These include Cambria’s Trinity portfolio (TRTY), the Bridgewater ‘All Weather’ portfolio (ALLW), 3Fourteen’s RAA ETF and Bob Elliot’s HFND.

So, to next steps and positioning for 2026…

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Time to reflect on some of the most important portfolio tweaks as we look ahead to 2026. A combined note this weekend (will be the same next weekend).

The timing could not have been better for Brent Johnson of to join Ben () and myself for a fascinating discussion on the dollar and the US’s 21st Century ‘Manhattan Project’. The discussion around stablecoins also helped to cement an idea from a reader that I have been thinking about. New ‘Acorn’ ‘stocking filler’ below.

If you missed the show live, please catch and the highlights on the “Benny & The Squirrel” YouTube channel (please also remember to subscribe there - we are already lining up a content blockbuster for 2026!).

FX Hedges

Spending an hour in the company of 2 dollar bulls like Brent and Ben always focuses the mind. To be fair, a ‘milkshake moment’ or ‘dollar napalm run’ is a risk that the 🐿️ has been at pains to hedge throughout the past 12 months.

Even if I believe that overseas dollar debtors and central bankers are likely to be better prepared (for a dollar liquidity squeeze) than they have been in the past, the muscle memory impulse for investors and traders to reach for US dollar cash during “risk off” moments is likely to remain strong.

Both BUSHY™, my beta portfolio, and the individual “Acorn” trades have had a significant ex-US bias throughout the year. This will not be changing as we enter 2026.

As a reminder we set out the philosophy for BUSHY™ and its hedge book in January (link to full note).

“The composition of this initial portfolio embeds some pretty out of consensus (with ‘Big Retirement’) bets on factor, asset class and geographic exposures:

• The BUSHY™ only owns large cap US tech stocks via their (tiny) equal weighting in the , long S&P futures within the trend portfolios, or if 3Fourteen’s factor and trend screening model () decides that it wants to rent them.

• BUSHY™ is structurally short the US dollar relative to the average “Big Retirement” portfolio.

• BUSHY™ is massively underweight duration risk (no long bonds unless the machines happen to own them, and they don’t currently); no profitless tech stocks; and no exposure to the financial nihilists’ YOLO™ portfolio).”

In January, a risk budget of 2.5% of NAV was allocated to:

• Out of the money calls on the (Tech) and ETFs, to hedge the underweight to US equities (especially MAG7) and shitcos profitless tech stocks.

• Puts on the Canadian Dollar (vs. USD) via CME Futures options (a USD hedge with an energy angle).

• Call options on 3-month SOFR futures to hedge BUSHY™’s lack of exposure to long duration fixed income.

Over the year, we made the following changes.

• We transitioned from a CAD-based FX hedge to a EUR-based one in March (in response to the political shifts in Ottawa). We replaced the EUR hedge with DXY/DX/UUP call spreads in June and added outright calls on the same underlying in September.

• In September we sought to protect the portfolio’s (global) equity risk with cheap (even if they got cheaper) Nasdaq 100 put spreads (via ), rolling into a similar position in early October.

• In early October, we also collared the portfolio’s gold exposure, closing this protection 3 weeks ago.

BUSHY™’s hedge book has ‘cost’ the portfolio 2.29% year-to-date. No regrets about that whatsoever. It was the prudent way to approach our non-consensus macro positioning versus my benchmarks and helped to manage periods of drawdown effectively.

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BUSHY™ hedge book over 2025 and plan for 2026

Unsurprisingly, the exam question regarding hedges is not dissimilar to the one facing the 🐿️ last year. But the challenges require further thought…

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In the weekend note, we covered an interesting opportunity in the smart glasses value chain. Link below in case you missed it.

My great friend joined us on Benny & The Squirrel on Thursday evening. We covered a whole load of topics that you will not want to miss. Link to the recording on YouTube below 👇:

Market and BUSHY™ Review

An interesting week in markets. The ‘fully priced’ rate cut was accompanied with a much less hawkish narrative than was expected. US stocks, bonds and the dollar all ended the week lower.

We saw some powerful sector rotation. Nervousness returned to AI infrastructure story, allowing some oxygen to return to the “Forgotten 490”. The equal-weighted S&P (RSP) outperformed the cap-weighted index (SPY) by a meaningful 1.69%. The “Zombie Beta” of small caps (IWM) had a very strong week, while the precious metals miners mocked my timidity for not buying them back.

A weaker dollar should have been a tailwind to emerging markets. This was not the case - a steep sell off in China large caps in particular. Latin American stocks bounced back from the ‘Bolsonaro Junior’ scare of the previous week. Ex-US developed market equities (MSCI EAFE / IEFA) were only marginally higher once you factor in the 0.62% of negative dollar move on the week.

US financials were the pick of the sectors. They appear to be eyeing up those steeper yield curves.

With less than 2 weeks until year-end I am wary of getting overly excited about these sector rotations and divergences in traditional cross-asset relationships. BUSHY™ remains defensively positioned (20% of the book in cash and hedges). Am not inclined to risk what has been a decent year on fresh themes in low volume holiday markets. BUSHY™ has plenty of the stuff that is working.

The beta portfolio’s bias towards international equity and fixed income exposures certainly ensured that it had a better week than its Vanguard ‘Big Retirement’ benchmark. BUSHY™ closed on Friday at a weekly high for the year but I freely acknowledge that most of the absolute return for the week was driven by that weaker dollar.

Precious metals (10.4% of the portfolio - with the gold now unhedged) did most of the heavy lifting. A pullback in the energy exposures (and uranium) cost the book 14bps. The trend allocation continued what has been a solid positive quarter thus far.

ETF Level Performance and Attribution

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