- the sentiment of a usually optimistic chief investment officer speaks a lot of what the investment community is quietly feeling.
by Kris Sidial, CIO Ambrus
It’s rare for me to take a bearish stance on equities.
I firmly believe in avoiding macro narratives and trading the price action in front of me. However, there are occasions when macro implications and price align.
In Q4 of last year, we were vocal about our belief that this administration would usher in equity volatility (see tweet below). A few months into the year, that view has been affirmed. But contrary to the belief that we’re near the end of heightened volatility, I believe we’re just at the beginning.
The Pavlovian reflex of buying the dip and selling volatility remains strong. Volatility surface dynamics reflect this: there’s continued demand for upside calls, while longer-term protection remains underpriced.
For the first time in a long time, an administration is explicitly signaling that they want risk assets to decline—to counter wealth inequality and inflation.
For eight years, Trump treated the stock market as his personal barometer. Now, we’re hearing statements like, “We aren’t looking at the stock market,” or from Bessent and Vance, “Short-term pain for long-term gain.” These comments aren’t just rhetoric—they’re clear signals that should not be overlooked.
Some of these policy reforms are extreme. We’re not talking about gradual, incremental changes like the U.S. has experienced over the last three decades. We’re talking about tariffs on major economies, aggressive immigration policies, mass layoffs, and fiscal audits. Each of these has second- and third-order effects that are difficult to price in the short term. This will create wider disparities in economic data and, in turn, cause equity volatility to become more erratic.
Structural Headwinds for Equity Markets
Supportive flows into equities are drying up. Last November, we saw a spike in U.S. equity exposure from domestic RIAs and international retirement plans, with many firms doubling down on their 2017 playbook, expecting a business-friendly administration.
That bet is now being reassessed.
•Foreign investors are rethinking U.S. exposure as trade tensions escalate.
•As unemployment rises and risk assets fall, consumerism contracts—and so does public market investing.
•Less personal investing, fewer employee contributions, fewer capital matches, more savings. This weakens the reflexivity cycle that has propelled equities since 2020. And this time, it’s amplified: U.S. household equity exposure is at all-time highs.
I’m all for climbing a wall of worry, but some things don’t require 3D mental chess. When an administration is explicitly waging a political and economic war on the existing system, markets tend to struggle digesting that.
I could go on, but the TL;DR is this: When you have a chaos agent in office aggressively pushing to “tear down” (their words, not mine) the establishment with a radically different policy approach, it’s reasonable to expect capital markets to struggle absorbing the shock.
As always, I’m never married to a view—I trade what’s in front of me. If we rip through all-time highs and price action shifts, I’ll adjust. But until then, equities are guilty until proven innocent.
