With the broader macro environment little changed, TCM strategies saw smooth sailing in July as stocks reached fresh all time highs and the VIX remained subdued. But with the seasonally more volatile fall months just ahead and risks on the horizon, the wind may be about to change.

Defying many expectations after a rough spring, equity indexes kicked off the summer with new all time highs in June. As is so often the case, investors who have tuned in to the market’s message and ignored the headlines this year have been rewarded and TCM portfolios are no exception.

After the best May in 35 years, markets are roughly unchanged since election day and ultimately, we expect economic fundamentals to “trump” sentiment - no pun intended.

After “Liberation Day” kicked the tariff panic into high gear, a 90 day tariff pause stabilized markets and revived hope in tariffs as merely a temporary bargaining tactic.  Whether or not this turns out to be true, confidence in US assets has been shaken and even assuming new trade deals, lingering economic uncertainty could weigh on growth for some time. 

TCM strategies pursue total return using a tactical risk management approach designed to produce not lower volatility but an up/down capture asymmetry (higher up than down capture) that enables attractive long-term growth with acceptable volatility. Now in the midst of the third major volatility spike in the past 8 years, TCM strategies continue to prove this concept out.