New President, New Cycle: Predicting the 2025 Market Peak (Part 2)
Part 2 of a series where I divine whether we're gonna have an early or late peak this cycle
Dear Alpha-Seekers,
Welcome to part 2 of the series where we examine whether we're in for a left-translated or right-translated peak.
If you haven't done so yet, check out the first part in the series here:
Today's Gameplan
Go over 8 more examples form history: 4 left-translated and 4 right-translated.
Gain a deep understanding of how to read the macro to determine which of the 2 is the most likely outcome
Analyse the current state of the macro KPIs
Finally, asses whether we're in for an early cycle top, or we can look forward to a top in late 2025, early 2026.
As I'm writing this, the S&P 500 is at an All-Time-High. We're truly living wonderful times:
Now, more than ever, is the right time to prepare and make sure that when this market tops, and IT WILL TOP SOON ENOUGH, you're not unprepared.
It's crucial you take out profits at the right moment, to squeeze the maximum juice out of here
And then pivot & chill in some shorts.
With that said, let's get to it
Learning From History
Below I've curated a list of 8 examples, 4-left translated and 4 right-translated peaks. In each example we'll take a look at the macro KPIs that we're tracking and see what kind of picture they were painting.
By doing this we'll understand how to correlate these KPIs with the market's behaviour
Then, by analysing the current values of these KPI's and applying the correlation we discerned above, we'll be able to form a reasonable expectation as to when will the market top this cycle
Richard Nixon (1969)
Real GDP Growth (YoY): ~3.1%, slowing
Inflation (CPI YoY): ~5% (high for the 1960s)
Federal Funds Rate: ~6–6.5%, rising
10-Year Treasury Yield: ~6.5%, climbing
Credit/Liquidity Conditions: Tightening
Unemployment & Job Market: ~3.5% → headed upward in 1970
Corporate Earnings: Flattening; wage-price spirals squeezed margins
Equity Valuations (S&P 500 P/E): ~16–17x pre-drop
Consumer/Business Confidence: Waning with Vietnam War costs, inflation
Global Macro / Geopolitical: Vietnam War escalation; Bretton Woods still in place but strained
Oil Price Trend: ~$3–$4/bbl, stable pre-1973 crisis
Gold Price Trend: $35/oz official (Bretton Woods) but real demand above that
DXY (U.S. Dollar Index): Not formally launched until ’73; USD stable under Bretton Woods
US10Y Trend: ~6% → ~7% by 1970
Outcome: Left-Translated (Peaked early in Nixon’s term; ~18-month downturn ensued)
Richard Nixon (1973)
Real GDP Growth (YoY): ~5–6% in 1972 → slowing in 1973
Inflation (CPI YoY): ~6% and rising
Federal Funds Rate: ~6% → near 10% by mid-1974
10-Year Treasury Yield: ~6–7%, climbing
Credit/Liquidity Conditions: Tightening
Unemployment & Job Market: ~4.9% → headed higher in late ’73
Corporate Earnings: Flattening or declining in many sectors
Equity Valuations (S&P 500 P/E): ~15x before drop
Consumer/Business Confidence: Plunged with Watergate & oil crisis
Global Macro / Geopolitical: OPEC embargo (Oct ’73) triggered the oil shock
Oil Price Trend: $3/bbl → >$10/bbl post-embargo
Gold Price Trend: ~$90–$100/oz (post-Bretton Woods)
DXY (U.S. Dollar Index): Launched 1973 near 100, volatile start
US10Y Trend: Yields climbed from ~6% → ~7–8%
Outcome: Left-Translated (Market peaked early 1973; 1973–74 bear market)
As President Nixon worked to stabilize the markets , and as the US switched from the gold-back US$ to the petro-dollar, I think it's a good idea to look at the start of the DXY chart.
INCEPTION, baby :)
Look not only at how the US$ behaved during President Nixon's term, but compare it to President Carter's term:
Ronald Reagan (1981)
President Reagan's first term came with its own set of challenges
Real GDP Growth (YoY): ~2.5% → negative by 1982
Inflation (CPI YoY): ~10–12% (very high)
Federal Funds Rate: ~15–20% range under Volcker
10-Year Treasury Yield: ~13–15%, near historic highs
Credit/Liquidity Conditions: Very tight (banks cautious)
Unemployment & Job Market: ~7.5% → ~10% by 1982
Corporate Earnings: Weak; high rates + reduced demand
Equity Valuations (S&P 500 P/E): ~7–8x after tumble (historically low, but overshadowed by rates)
Consumer/Business Confidence: Fell sharply in the 1981–82 recession
Global Macro / Geopolitical: Cold War tensions; high defense spending overshadowed by inflation fight
Oil Price Trend: ~$32–$38/bbl (post-1979 spike)
Gold Price Trend: Peaked around $600–$700 in 1980, still elevated in ’81
DXY (U.S. Dollar Index): Very strong (Volcker’s high rates attracted capital)
US10Y Trend: Stuck above ~13%, not dropping until 1982–83
Outcome: Left-Translated (Market peaked quickly in 1981; deep recession followed)
George W. Bush (2001–2002)
President Bush's first term came to be right as the Dot-Com bubble burst. Ouch…
Market topped almost a year earlier, in March `00 ; it then took 2 more years from inauguration for the market to finally bottom → in March '03
Real GDP Growth (YoY): ~1–2%, tepid post–dot-com
Inflation (CPI YoY): ~2–3% (not the main worry)
Federal Funds Rate: ~6% → ~2% by end of 2001 (aggressive cuts)
10-Year Treasury Yield: ~4–5%, drifting lower on recession fears
Credit/Liquidity Conditions: Tight for tech; easier for established sectors
Unemployment & Job Market: ~4% → ~5.5% amid layoffs, especially in tech
Corporate Earnings: Negative/flat in many tech-driven segments
Equity Valuations (S&P 500 P/E): Still ~22–25x post-bubble
Consumer/Business Confidence: Fell sharply post-9/11
Global Macro / Geopolitical: 9/11 attacks, War on Terror heightened risk aversion
Oil Price Trend: Volatile; dipped on recession fear, spiked with MidEast tensions
Gold Price Trend: ~$280–$320/oz, rising as a safe haven
DXY (U.S. Dollar Index): Strong → then weakening toward 2002
US10Y Trend: ~5% → ~4%, reflecting slowdown
Outcome: Left-Translated (Any rebound attempt fizzled early; bear market lasted ~18+ months)
Now - let's cheer ourselves up by looking at some right-translated peaks (what we all secretly hope for) 👇
George H. W. Bush (1989)
Market tops out in Q3 of the mid-term year, bottoms in Q4. Nicely done ✅
Real GDP Growth (YoY): ~3–4% (1989) → slowing in 1990
Inflation (CPI YoY): ~4–5%
Federal Funds Rate: ~9–10% (high but gradually adjusted)
10-Year Treasury Yield: ~8–9%, stable
Credit/Liquidity Conditions: Not overly tight until late 1990
Unemployment & Job Market: ~5.3% → rising mid-1990
Corporate Earnings: Robust through ’89, slowed in ’90–91 recession
Equity Valuations (S&P 500 P/E): ~14–15x
Consumer/Business Confidence: Decent before Gulf War buildup
Global Macro / Geopolitical: Berlin Wall fell (Nov ’89); Gulf War in 1990
Oil Price Trend: $18–$20/bbl → spiked above $30 in 1990
Gold Price Trend: ~$400/oz, mild uptick during Gulf conflict
DXY (U.S. Dollar Index): ~80–90 range, moderate
US10Y Trend: Hovered ~8–9%, minor moves
Outcome: Right-Translated (Peaked ~1.5 years in, shorter ~8–9-month bear tied to Gulf War)
Bill Clinton (1993–2001)
Both of President's Clinton's terms exhibit the same kind of power-growth patterns. Really a very prosperous era for America
First term: market topped in Q1 of the midterm year; bottomed in Q3
KPIs below are for 1993-1995 period
Real GDP Growth (YoY): ~3–4% (’95–’96)
Inflation (CPI YoY): ~2.5–3%, quite tame
Federal Funds Rate: ~5.5–6%, steady post-1994 hikes
10-Year Treasury Yield: ~6–7%, range-bound
Credit/Liquidity Conditions: Generally easy, strong corporate lending
Unemployment & Job Market: ~5.5% → ~5%
Corporate Earnings: Robust, especially in tech and large caps
Equity Valuations (S&P 500 P/E): ~17–18x
Consumer/Business Confidence: High and climbing
Global Macro / Geopolitical: Relative calm post–Cold War
Oil Price Trend: ~$18–$25/bbl, stable
Gold Price Trend: ~$380–$400/oz, sluggish
DXY (U.S. Dollar Index): ~80–85, no major swings
US10Y Trend: Hovered ~6–7%, no spikes
Outcome: Right-Translated (Rally extended well into Clinton’s term; shorter 8–12-month corrections)
George W. Bush (2005, Second Term)
Choppy rally into Q2 of the midterm year; corrected into Q3 of the same year
Then market rallied till the GFC top in October '07
Real GDP Growth (YoY): ~3–4% in ’05–’06 → slowing by ’07
Inflation (CPI YoY): ~2–3%, manageable
Federal Funds Rate: ~2.25% → 5.25% (2006), gradual hikes
10-Year Treasury Yield: ~4–5%, yield curve flattened/inverted
Credit/Liquidity Conditions: Very loose (housing boom) until ’07 cracks
Unemployment & Job Market: ~5% → ~4.5%
Corporate Earnings: Strong, especially in financials/housing
Equity Valuations (S&P 500 P/E): ~15–17x (2005–07)
Consumer/Business Confidence: High, fueled by real estate gains
Global Macro / Geopolitical: Iraq War ongoing but overshadowed by domestic housing mania
Oil Price Trend: $50–$70/bbl, rising but not a showstopper
Gold Price Trend: $425 (2005) → $650+ (2007), steady climb
DXY (U.S. Dollar Index): ~80–90, slightly weakening
US10Y Trend: ~4–5%, flattening curve signaled hidden risks
Outcome: Right-Translated (Final Peak arrived late 2007, nearly 3 years into term)
Barack Obama (2013, Second Term)
Benefited from an extended rally; market topped in Q2 of the pre-election year. It then found a bottom in Q1 of the election year
A prosperous age of recovery form the GFC
Real GDP Growth (YoY): ~2–2.5%, steady
Inflation (CPI YoY): ~1–2%, tame
Federal Funds Rate: ~0–0.25% (ZIRP) until late 2015
10-Year Treasury Yield: ~2–3%, “Taper Tantrum” then stabilized
Credit/Liquidity Conditions: Generally easy post-crisis
Unemployment & Job Market: ~7.5% → ~5% by 2015
Corporate Earnings: Strong in tech/large caps, stable growth
Equity Valuations (S&P 500 P/E): ~15–18x
Consumer/Business Confidence: Improved as the recovery solidified
Global Macro / Geopolitical: Mild Eurozone jitters, overshadowed by QE support
Oil Price Trend: ~$90–$100/bbl, then a sharp drop in late 2014
Gold Price Trend: ~$1,300–$1,400/oz (2013), drifting lower by 2015
DXY (U.S. Dollar Index): ~80–85, then strengthened in 2014–15
US10Y Trend: Spike to ~3% in 2013, cooled to ~2%
Outcome: Right-Translated (Market corrections in 2015/16 were brief; extended bull deeper into 2nd term)
Final Overview of History
Left-Translated Peaks (Early in the post-inauguration cycle; longer bears):
Nixon (1969), Nixon (1973), Carter (1977), Reagan (1981), G.W. Bush (2001–2002), and (repeated) Carter (1977).
Right-Translated Peaks (Later in the cycle; shorter bears):
G.H.W. Bush (1989), G.W. Bush (2005, 2nd term), Obama (2009–2011/12), Obama (2013, 2nd term), Clinton (1995–1996), Trump (2017), Biden (2021).
By examining this comprehensive set of macro KPIs—from GDP and inflation to oil, gold, DXY, and bond yields—you can see how each environment either accelerated a market top (left-translated) or delayed it (right-translated).
Now for the juicy part 🔥
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Actionable strategies for multiple scenarios
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