To out-perfrom a market, you need to take different risks than the market. The problem is that most active managers are institutionally prevented from doing so.

The biggest challenges for markets are from cash - having been too cheap to borrow and too expensive to save, we now have the opposite, with some balance sheets under pressure while liquidity is syphoned out of equities and credit by high deposit rates. Market breadth is extremely narrow, with 493 stocks flat ytd and 7 up more than 50%. Much of this is tied into hype around AI.

Markets are largely range bound, albeit the previous strong correlations have broken so that some are at the top of recent ranges while others are at the bottom. This is contributing to an overall feeling of uncertainty, compounded by lack of direction from central banks, Geo Politics and muddied economic data.

Despite Banking crises, markets ended the month and the quarter higher, giving relief to 60;40 funds and grief to Macro Hedge Funds, caught short once again. Geo-politics is building a new, non $ zone, which together with the Japanese shifting their monetary policy stance threatens significant changes to the 'plumbing' of global markets.

Short covering drove markets in January, then February saw some rebalancing flows before increased Geo-Political tension led to some tail risk hedging ahead of the March options expiry. Traders are thus waiting for direction, while asset allocators are looking at relative value trades and not buying into the macro pundits belief that everyone else is wrong. Longer term investors meanwhile may have stopped selling rallies, but they haven't really started buying dips. Finally, as long term investors start thinking about de-dollarisation in 'The Rest' of the world, we should consider moves to 're-dollarise' the West.