In early 2014, systematic trading strategies suffered such losses that market analysts declared the systematic space “dead.” By year’s end, however, the SocGen CTA Index, which is primarily comprised of systematic strategies, achieved a record annual return of more than 15 percent.  The same is likely to happen this year. Global markets will have clarity regarding Tariffs, the Fed, and the U.S. Budget, and trading strategies such as Gnomon Alpha will profit. 

So far, Tariff policy has been dynamic to put it in a positive light. The amount of Tariffs. The targets of tariffs. The deadline for implementing Tariffs has all been started and stopped multiple times. The targets continue to move when it comes to tariffs. However, as the dust settles and tariffs become entrenched in the economy, markets will adapt, and the adaptation will provide strong profit opportunities for traders. 

The same holds for the relationship between Trump and the Fed. At some point, political differences must be put aside in favor of what is best for the economy. President Trump and Fed Chairman Powell will not be able to deny the facts regarding inflation and employment; the markets will resume setting interest rates consistent with economic needs rather than political considerations. 

Finally, information will be released regarding the budget. Tax receipts and growth will either match expectations or they won’t. Either way, markets will react. The data will be undeniable, and opportunities will emerge, especially in fixed-income and currency trading. 

So far in 2025, the economic shocks to the market have been dictated rather than systemic. This has made market reactions shorter term. Gnomon Alpha has tweaked its models going forward to capture these gyrations, especially when equity markets fall over just a period of a few days. 

Moreover, Gnomon, despite the current drawdown, remains among the top 40 percent of performers in the CTA space, according to Nasdaq’s Evestment program. Since its inception, Gnomon has remained in the top decile in terms of return, Alpha, and drawdown recovery in the global macro space. Moreover, Gnomon has systematically halved its risk this year amid these trading challenges. According to Evestment, our peers continue to trade at the same level of risk. 

So, despite enduring our largest drawdown, we at Gnomon Alpha believe that going forward, 2025 will be a year to remember for resilience, perseverance, and market expertise, the qualities our team has embodied since the inception of this firm.