Performance 2025
First quarter 2025
The first quarter of 2025 ended with a decline of –17.17% for Class A for the quarter.
This challenging start to the year, marked by extreme volatility across global markets, underscores the need for the adjustments implemented over the past few months.
As mentioned in our previous letter, we introduced new market filters at the beginning of January. These filters were triggered during the first weeks of the ongoing major correction, which continues to affect equity markets—particularly in the United States. Virtually no financial asset has been spared.
Designed to detect statistical anomalies in market dynamics, these filters mechanically reduced our exposure. While this relative absence from the markets temporarily weighs on our performance, it primarily serves to protect capital during prolonged market dislocations and to create new opportunities when conditions normalize. This period of watchfulness has also allowed us to explore other avenues, notably the use of LTR-type algorithms for portfolio construction and the research of specific strategies on the VIX futures contract, whose fluctuations are expected to intensify in the coming quarters.
United-States
We will refrain from overinterpreting or dramatizing recent economic events. Contrary to some alarmist analyses, the Trump administration appears to be following a coherent roadmap: reducing the United States’ financing costs amid a massive refinancing effort (nearly USD 7 trillion to be refinanced in 2025).
In January, the yield on 10-year U.S. Treasuries reached 4.89%. By the end of March, it had fallen below 4%, returning to levels last seen in October 2024. This decline is not insignificant: it partly reflects the administration’s efforts to deflate equity markets in order to encourage a rebalancing toward bonds—thus increasing demand for U.S. debt and lowering yields.
With this goal of reducing rates, the Trump administration is pressuring the Federal Reserve for swift intervention. Repeated public statements calling for lower interest rates are creating mounting political pressure on the Fed, which might respond earlier than anticipated if the market correction persists. Such a rate cut would further ease long-term yields.
Meanwhile, the U.S. continues to grapple with twin deficits—fiscal and trade. To address the latter, the administration is pursuing bilateral trade deals. Some countries have already offered targeted free trade agreements, while China has signaled its readiness for a long-term standoff.
European Union
The European Union remains entangled in a series of structural challenges that are weakening its economic momentum. Four key factors illustrate this situation:
- The German economic model—based on cheap energy imports (especially Russian gas) and large-scale industrial exports—is now under strain.
- Europe can no longer rely on the U.S. military guarantee, prompting some countries to rethink their defense strategies.
- Growth remains sluggish, with virtually no productivity gains and concerning demographic prospects.
- An aging population increases the savings stock but weighs on production and consumption dynamics.
Germany’s announcement of a massive rearmament plan (€900 billion over 10 years) marks a historic shift, breaking two taboos: fiscal restraint and military power. Despite its size, this effort should be absorbed without difficulty thanks to Germany’s substantial domestic savings surplus.
By contrast, France lacks both the fiscal room and market credibility to launch a similar initiative. This discrepancy could lead to rising French yields, as investors turn back to more readily available German bonds at the expense of French debt.
Finally, Europe remains divided on how to respond to the rise in U.S. tariffs. While some leaders advocate negotiation, others are considering retaliatory measures targeting American tech giants (GAFAM), raising fears of a trade escalation.
China
China is continuing its strategy of economic adjustment amid significant uncertainty. The government has leaned heavily on state-owned enterprises, which have benefited from massive liquidity injections by the People’s Bank of China.
These measures helped partially stabilize activity in Q1, although growth came in slightly below that of Q4 2024. The real estate sector remains the Achilles’ heel of the Chinese economy, with sales at historic lows and increasingly inventive efforts to stimulate demand—sometimes humorously relayed in the local press.
Externally, Beijing responded firmly to the latest U.S. protectionist measures. Following an increase in U.S. tariffs on Chinese goods, China imposed 125% tariffs on selected categories of imports. This commercial standoff could have longer-lasting effects on global trade in the coming quarters.
Second quarter 2025
The second quarter results for 2025 ended with a performance of 1.72% return for Class A for the quarter.
This modest rebound occurred in a context of apparent market stability but should not obscure the economic warfare climate initiated by the Trump administration against all of its trading partners.
Since February, we have voluntarily suspended the majority of our trading activity. This decision, motivated by a desire to preserve capital in a deeply unstable market environment, has been used to recalibrate our approach.
What follows outlines the key technical aspects of this overhaul:
Sampling — a cornerstone of statistical time series analysis — conventionally assumes, both for practical and traditional reasons, that some data points (the samples) are special and deserve attention that cannot (or should not) be extended to others. However, this assumption corresponds neither to a physical reality nor to our operational experience. After substantial theoretical and developmental work, we have devised a new way of analyzing time series by treating each data point as the origin of a backward-extending sample. This paradigm shift significantly increases the number of usable samples and thereby improves the statistical stability of our analyses.
We have also innovated in generalizing the walk-forward optimization (WFO) methodology by designing an approach that removes the need to predefine the size of the out-of-sample segment. This breakthrough allowed us to replace traditional statistical validation tests — such as the White Reality Check — with a proprietary framework that is both more robust and more aligned with current market conditions.
Ultimately, our objective is to return to the markets with strategies that are not only effective but also significantly more stable when conditions become favorable again.
This deep restructuring effort takes place against a backdrop of profound macroeconomic shifts, where trade tensions and geopolitical realignments are reshaping global market dynamics. It is in this context that we now present our analysis of the latest economic developments in the United States, Europe, and China.
United-States
The Trump administration continues to pursue its aggressive economic agenda, centered on a massive increase in trade barriers. Since the beginning of the year, tariffs on Chinese goods have surged to nearly 35%, up from 11% in January, with targeted hikes now affecting a broad range of sectors, including automotive, electronics, pharmaceuticals, and metals. While the official goal remains U.S. reindustrialization and the reshoring of supply chains, the immediate impact has been a negative shock to global trade.
Global trade growth is slowing sharply: from 2.9% in 2024, it is expected to fall to just 1.1% in 2025 according to the IMF — or even contract slightly, based on the WTO’s latest forecasts. This slowdown is weighing on global demand, especially in the United States, where trade volumes are expected to decline by more than 10% this year. While Asian and Latin American economies (excluding Mexico) face varying levels of exposure, the direct and indirect effects of U.S. trade policy are spreading across all open economies. In the short term, the risk of a lasting decoupling between the U.S. and some of its major partners is becoming increasingly real.
European Union
Europe is facing the collateral damage of the U.S.–China trade war. Central and Eastern European countries, heavily export-oriented — particularly in the automotive sector — are directly affected by rising U.S. tariffs, but even more so by the slowdown in German exports. Their dependence on Germany’s industrial engine makes economies like Slovakia, the Czech Republic, and Hungary particularly vulnerable.
In the longer term, however, Europe could benefit from the reconfiguration of global value chains. China is actively seeking to invest in regions offering political stability, robust logistics infrastructure, and strategic proximity to end markets. Central Europe — with its skilled workforce, competitive tax regimes, and access to the EU single market — has seen a surge in Chinese investment in recent years, led by Hungary.
In response to rising Chinese competition within the European market, the European Commission introduced an import monitoring mechanism in April, in agreement with Beijing. This cautious cooperation aims to avoid a wave of European protectionism while tightening oversight over sensitive trade flows.
China
China is facing a sharp rise in U.S. tariffs and an expected 20% drop in exports to the United States. In response, it has accelerated its geographic diversification strategy. Since spring, Chinese exporters have begun redirecting trade flows toward alternative markets — sometimes via third countries — to circumvent tariff barriers. This dynamic has increased competitive pressure on domestic and regional markets, particularly in Southeast Asia.
At the same time, Beijing is continuing its industrial upgrading strategy. While some countries suffer from intensified competition, others benefit indirectly from rising Chinese exports of intermediate goods, supporting their own industrial development. China is also working to strengthen ties with regions less exposed to U.S. tensions. Latin America, with its abundant natural resources, is attracting growing Chinese investment, particularly in agriculture and mining.
However, access to the Chinese market remains limited for European and Asian economies that export manufactured goods. Beijing’s drive for industrial self-sufficiency continues to constrain import opportunities, despite stated efforts to stimulate private consumption.
