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New President, New Cycle: Predicting the 2025 Market Peak (Part 2)

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

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Michael Serven
Jan 24, 2025
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New President, New Cycle: Predicting the 2025 Market Peak (Part 2)
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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:

New President, New Cycle: Why This Peak May Surprise Everyone

New President, New Cycle: Why This Peak May Surprise Everyone

Michael Serven
·
Jan 22
Read full story

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.

Alpha-Driven Portfolio is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.


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)

Remember - Inauguration Day is marked in blue on the chart. Market peaks early, a few weeks before Inauguration. Then keep trending down all the way to Q4 of the Midterm Year. That's 7 quarters of bearish PA …
  • 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)

Alpha-Driven Portfolio is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

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 🔥

This section is available exclusively for my paid subscribers.

If you want to know:

  • What the current macro is telling us

  • What's my prediction on when the market will peak

  • When to sell & how to maximize profits

  • Actionable strategies for multiple scenarios

  • How to prepare and profit from 2026

Then upgrade to a paid subscriber today! I

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