This Weekly Update was first published for Tier One subscribers on 25 July 2026.

We argued that long-term Treasury yields had entered what we call the TACO Zone: the point at which tighter financial conditions begin imposing enough political and economic pain to make a Trump retreat increasingly likely.

Two days later, President Trump has paused US strikes on Iran. Oil is falling sharply, Treasury yields are easing and risk assets are rallying.

The TACO may now be unfolding in real time.
Here is what we wrote before the turn.

Long-term yields have pushed into the zone we label the TACO Zone.

The 30-year Treasury yield is testing and probing the 5.16–5.20 area after a sustained rise along its multi-year uptrend. We call it the TACO Zone for a reason. At these levels, higher long-end yields begin to impose visible political and economic costs: rising mortgage rates, pressure on equity valuations, and tighter financial conditions that become harder to ignore.

History suggests this is precisely the point at which incentives can shift. For an administration focused on growth and market stability, the political calculus of allowing yields to break decisively higher starts to deteriorate.

The temptation to deliver a TACO (Trump Always Chickens Out), to soften rhetoric, adjust policy signals, or create conditions that ease the long end, tends to rise once the pain threshold is reached.

A decisive break above the zone would tighten financial conditions further and raise the bar for our Dovish Shock confirmation ladder.

The market is still priced for a restrictive path; this is the latest reminder that monetary evidence must still improve before the thesis can move from alive to confirmed.

At the same time, the very existence of the TACO Zone highlights the growing tension between market pricing and political incentives.

Energy has been the clearest beneficiary of the renewed geopolitical risk premium. XLE has broken higher from a textbook flag consolidation, accompanied by improving relative strength versus the broader US equity market.

The existing allocation is responding exactly as the Iran related supply fears and oil volatility would suggest. Absolute momentum and relative performance are both moving in the same direction for the first time in several months.

At the same time, another important dynamic is gripping markets: growing uncertainty about the ultimate size, speed and profitability of the AI capex boom.

Recent breakthroughs from Chinese laboratories continue to change the calculation, both the size of the overall pie and how the slices may ultimately be distributed. Capability is improving while costs compress.

That combination pressures the scarcity premiums that defined the first phase of the trade.

Our recent exit from the remaining EWY position after a 238% total return therefore appears increasingly timely.

We entered when memory was still an underappreciated bottleneck. We left once the market had fully discovered the thesis and price had begun to embed an unusually optimistic future. The subsequent reversal in South Korean equities simply reinforces the value of harvesting when recognition arrives.

No change to the Model Portfolio is required.

The existing exposures already capture the energy risk premium and the downstream application-layer opportunity. Higher long-end yields remain a headwind that the Dovish Shock thesis must still overcome, even as political incentives to deliver a TACO begin to build. We will continue to measure price against process rather than force activity for its own sake.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Important Disclosure

This article reproduces general investment research first published for Tier One subscribers on 25 July 2026. It was produced by Vasco Marques de Freitas, CFA, CMT, Founder and CEO of VMF Research, Lda. The original analysis, charts and conclusions reflect the information available at the time of publication and have not been revised with hindsight. Any introductory comments concerning subsequent events were added when the article was republished and should be distinguished from the original research.

The publication contains information recommending or suggesting an investment strategy. It is not personalised investment advice and does not consider any reader’s objectives, financial circumstances, knowledge, experience or tolerance for risk. The Tier One Model Portfolio is an illustrative research portfolio and does not represent client assets or transactions executed by VMF Research.

The analysis combines macroeconomic, political, fundamental and technical evidence within a medium- to long-term framework. The “TACO Zone” and “Dovish Shock” are conditional analytical hypotheses, not forecasts or assurances. Subsequent developments may appear consistent with the analysis without confirming its broader conclusions, and market conditions can reverse rapidly. Views are reviewed through VMF Research’s monthly publications and may be updated through weekly or ad hoc research.

Equities, energy-sector instruments, sovereign bonds and interest-rate-sensitive assets involve substantial market, geopolitical, policy, liquidity and valuation risks. Technical signals may fail, political decisions may change without warning and investors may incur material losses.

Disclosure of interests: as of the original publication date, neither VMF Research, Lda. nor Vasco Marques de Freitas personally held any financial instrument mentioned in this article.

Past performance is not indicative of future results. Readers should conduct their own analysis and, where appropriate, consult an authorised financial adviser before making an investment decision.

This week gave crypto investors almost every excuse to sell.

Renewed tensions with Iran weighed on risk appetite. Oil moved higher. The latest Federal Reserve communications reinforced the market’s hawkish interpretation of monetary policy. And liquidity conditions remain far from the kind of backdrop that normally allows crypto-assets to thrive.

Yet something important happened. They refused to break.

Bitcoin continues to test one of the most consequential long-term support zones on its chart. This is the area where the secular breakout, major retracement levels, and long-term trend references converge.

And the week provided a powerful excuse to lose it. It did not. That does not mean the correction is over. Bitcoin remains more than 50% below its peak, the intermediate trend is damaged, and sentiment across the crypto complex remains deeply depressed. But important market signals often begin with what fails to happen.

The bears received the geopolitical shock.

They received the hawkish Fed. They received the tightening narrative. And Bitcoin still held support.

Ethereum is sending an equally interesting message. Its longer-term structure remains less constructive than Bitcoin’s, and we should not pretend otherwise. But ETH has not made a lower low. More importantly, it is beginning to gain relative strength against Bitcoin. That is precisely the kind of change we want to see. Bitcoin typically provides the first line of defence when liquidity is scarce. Ethereum and the broader crypto ecosystem tend to respond later, once investors become more willing to accept risk. If ETH is beginning to outperform before the macro backdrop has clearly improved, the market may be looking beyond today’s headlines.

Solana is showing a similar pattern.

Its chart remains volatile and technically damaged, but it too is refusing to make a lower low while beginning to improve against Bitcoin at the margin.

None of these signals is decisive in isolation.
Together, they deserve attention.

Bitcoin is holding major support. Ethereum is beginning to outperform it. Solana is attempting to do the same. So, what is the market starting to discount?

Perhaps investors are looking ahead to renewed progress on the CLARITY Act and a more durable regulatory framework for digital assets. Perhaps they are beginning to anticipate an improvement in global liquidity. Or perhaps the selling pressure has simply become exhausted after one of the deepest sentiment resets in crypto’s history.

Our working hypothesis remains unchanged. Markets are still positioned for a more hawkish monetary regime than the evidence may ultimately justify. If inflation pressures ease, geopolitical risk fades, and policymakers move from threatening additional tightening toward an extended hold, the resulting repricing could become the Dovish Shock we have been testing across our publications.

And if that thesis proves correct, crypto is precisely the asset class we would expect to respond most forcefully.

Stay tuned.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Important Disclosure

This Article reproduces general investment research from the Alpha Tier Weekly Update published on 11 July 2026, produced by Vasco Marques de Freitas, CFA, CMT, Founder and CEO of VMF Research, Lda. The analysis and charts reflect the information available at the research cut-off. Cryptoassets trade continuously, and prices may have changed materially since publication.

This publication contains information recommending or suggesting an investment strategy. It is not personalised investment advice and does not consider any reader’s objectives, financial circumstances, knowledge, experience or tolerance for risk.

The analysis combines macroeconomic, liquidity, technical and relative-strength evidence within a medium- to long-term framework. References to technical support, improving relative strength, regulatory developments or a possible “Dovish Shock” are conditional analytical judgments, not assurances of future performance. Views may change as the evidence evolves and are reviewed through VMF Research’s monthly, weekly or ad hoc publications. Bitcoin, Ethereum, Solana and related financial instruments are highly volatile and speculative. They involve substantial market, liquidity, regulatory, technological, cybersecurity and custody risks and may result in a total loss of capital.

Disclosure of interests: legal entities controlled by Vasco Marques de Freitas hold long positions in listed ETFs providing economic exposure to Bitcoin, Ethereum and Solana. These holdings may benefit from increases in the value of the crypto-assets discussed and constitute financial interests and potential conflicts of interest.

Past performance is not indicative of future results. Readers should conduct their own analysis and, where appropriate, consult an authorised financial adviser.

“I think biotech is about to have a renaissance… ultimately driven by AI.”

Dario Amodei

For most of this cycle, market leadership has been extraordinarily narrow. Technology (XLK) remains the only major sector firmly established in the leading quadrant of the Relative Rotation Graph above.

And even within technology, much of the strength has remained concentrated in semiconductors and the physical infrastructure required to build artificial intelligence.

But something important may now be changing.

Healthcare (XLV in the chart above) is beginning to gain relative momentum. The sector remains in the lagging quadrant, so we should not declare a new leadership regime prematurely.

Still, the direction of travel matters.

After years of persistent underperformance, healthcare is beginning to rotate higher precisely as investors search beyond the most crowded AI winners.

The chart provides the first confirmation.

Our global healthcare position has broken above a major resistance zone and is now attempting to escape a long relative-strength downtrend against the broader equity market. The move has also occurred with price comfortably above its rising 20- and 50-week moving averages.

That is constructive.

It suggests that healthcare may be doing more than participating in a temporary defensive rotation. The sector could be entering a more durable period of market recognition after years of depressed valuations, political uncertainty, and capital scarcity.

There are several reasons why.

Large pharmaceutical companies face an increasingly urgent need to replace revenues threatened by patent expirations. Biotechnology financing and M&A activity are recovering. And perhaps most importantly, artificial intelligence is moving from an abstract promise toward a practical tool for drug discovery, molecular design, patient selection, clinical development, and operational efficiency.

That last point has always been central to our thesis. The first phase of the AI boom rewarded those building the intelligence layer: semiconductors, memory, data centers, and power infrastructure.

The next phase may reward the sectors capable of applying that intelligence to some of the world’s most complex and valuable problems.

Healthcare sits near the top of that list.

Dario Amodei, the CEO of Anthropic, recently argued that biotechnology may be entering a renaissance ultimately driven by AI. His point was not that algorithms will magically eliminate the physical realities of clinical trials, regulation, manufacturing, and commercialization.

It was that biology contains design spaces far too complex for human intelligence to navigate efficiently on its own.

AI may change that. And the market appears to be reaching a similar conclusion.

Our biotech position through has already broken decisively to multi-year highs.

Relative strength is improving, and the position is now approaching an 80% gain from our original recommended price.

This is important for two reasons.

First, biotechnology often acts as the higher-beta expression of a broader healthcare rotation. Its outperformance suggests that investors are not merely hiding in defensive pharmaceutical companies. They are beginning to reward innovation.

Second, it confirms that the opportunity we identified while the sector remained deeply unpopular is becoming increasingly consensual. That does not mean the trade is over.

Quite the opposite.

SBIO may be showing us where IXJ is heading. We will still demand confirmation. Breakouts can fail, and healthcare carries regulatory, scientific, and political risks that should never be minimized.

But the message from the charts is becoming harder to ignore.

Healthcare is gaining relative strength.
IXJ is breaking out.
SBIO is already leading.

The AI trade may be beginning to migrate from chips to cures.

-

Good investing!

Vasco Marques de Freitas, CFA, CMT

Important Disclosure

This publication contains general investment research produced by Vasco Marques de Freitas, CFA, CMT, Founder and CEO of VMF Research, Lda. The analysis and market data are stated as of 2 July 2026, 4:00 p.m. Eastern Time, the latest New York market close before publication on 4 July 2026. It is not personalised investment advice and does not consider any reader’s individual objectives, financial circumstances or tolerance for risk.

The Tier One Model Portfolio is an illustrative research portfolio and does not represent client assets or transactions executed by VMF Research. References to portfolio positions relate solely to that Model Portfolio.

Healthcare and biotechnology instruments, including IXJ and SBIO, involve substantial market, scientific, clinical, regulatory and political risks. Technical breakouts may fail, and investors may incur material losses. Views are reviewed through VMF Research’s monthly publications and may be updated weekly or ad hoc.

Disclosure of interests: as of the research cut-off, neither VMF Research, the author personally, nor legal entities controlled by the author held positions in IXJ or SBIO.

Past performance is not indicative of future results.

“There is nothing more deceptive than an obvious fact.”

Arthur Conan Doyle

Kevin Warsh’s first FOMC meeting appeared, at first glance, to challenge one of our highest-conviction working hypotheses: That markets are vulnerable to a Dovish Shock.

The Federal Reserve left interest rates unchanged, but the tone was unmistakably different. Forward guidance disappeared. Price stability moved to the center of the message. And the latest projections suggested that a meaningful portion of the Committee now sees higher rates before the end of the year.

The market’s verdict was immediate.

Warsh had introduced a hawkish bias. But is that really the whole story?

Warsh launched five reviews covering communications, the balance sheet, data, productivity and employment, and inflation.

Two are especially relevant to our thesis. He argued that AI-driven productivity could allow strong growth, low inflation, and high employment to coexist... precisely the framework we outlined in June.

He also questioned the Fed’s reliance on lagging, heavily revised statistics, favoring more real-time private-sector data and AI-enabled analysis.

A Fed looking through the windshield may reach very different conclusions from one staring into the rear-view mirror.

This does not make Warsh dovish yet. But the market may be extrapolating too much from one press conference.

Elsewhere, Asia produced a striking divergence.

Chinese technology stocks continue to fall. KWEB has broken below its rising channel, sentiment remains exceptionally poor, and the weekly RSI is deeply oversold.

The prevailing consensus is clear: China is uninvestable.

We disagree.

Chinese technology remains one of the cheapest, most unloved, and potentially powerful expressions of the AI application layer.

The technical picture is weak, but that weakness is precisely what creates the asymmetry.

Japan sits at the opposite extreme. The yen keeps depreciating. Sovereign yields keep rising. Yet Japanese equities continue making higher highs. Our exposure through EWJ remains one of the Model Portfolio’s strongest pockets of relative performance.

While investors debate the macro contradictions, price keeps rewarding Japanese corporate reform and improving profitability.

Finally, both senior and junior gold miners ended the week with powerful reversal candles. GDX briefly broke below its widely watched 50-week moving average, rejected those lower prices, and closed back above support.

That is the kind of weekly hammer we notice.

It is not confirmation that the correction is over. But it may signal that sellers are exhausting themselves precisely where pessimism has become extreme.

And... it may be an early indication that our Dovish Shock thesis remains alive.

Warsh’s first appearance sounded hawkish. But his emphasis on productivity, real-time data, and the compatibility of strong growth with lower inflation suggests his reaction function may ultimately prove far more dovish than the market anticipates.

Stay tuned.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer: This is general information, not personalized investment advice. It’s not a recommendation to buy or sell anything. Investing involves risk, and past performance doesn’t guarantee future results. Do your own research and consider speaking with a licensed/authorized professional who understands your objectives and risk profile.

“Bull markets are born on pessimism, grow on skepticism, mature on

optimism, and die on euphoria.”

John Templeton

In June’s issue of VMF’s Strategic Asset Allocation, we devoted significant attention to one of the most important divergences in markets today. AI-related assets have gone parabolic.

Cryptoassets have gone in the opposite direction.

That contrast is striking. It is also exactly why the opportunity may be so interesting. As we explained in the monthly issue, we do not see crypto as separate from the AI story. Over time, we believe it may prove to be one of its most important extensions, especially as autonomous agents, digital payments, tokenized assets, programmable money, and machine-to-machine transactions become increasingly relevant.

For now, however, the market does not see it that way.

Bitcoin remains under pressure and sentiment across the crypto complex is deeply depressed. But price is now testing a major long-term support zone. And this is not just any support zone. It brings together several important technical references: key moving averages, Fibonacci retracement levels, and the prior multi-year breakout area.

Take your pick...

There is a lot of support here, which is precisely what makes this level so important. Our view remains that it will hold. That does not mean the process will be comfortable. Important lows rarely are.

But the combination of extreme pessimism, a 50% drawdown, a major support test, and an emerging bullish momentum divergence is exactly the kind of setup we want to study closely, not abandon emotionally.

The same message is beginning to appear elsewhere in our Alternatives book. Take silver. As you can observe in the chart, PSLV just printed a large weekly hammer almost exactly where it needed to: right above the support provided by the 50-week moving average.

This is happening after a sharp correction, with momentum washed out and retail sentiment toward precious metals sitting at deeply pessimistic levels.

That matters. When an asset refuses to break down at a widely watched support level, precisely when investors are least interested in owning it, the message deserves attention. Silver is not yet out of the woods, but the risk-reward profile is improving.

Meanwhile, in our Equities book, Altius Minerals continues to shine. This remains one of our highest-conviction positions across Alpha Tier’s Model Portfolio, and the price action continues to validate that conviction.

While many cyclical stocks have struggled through the recent risk-off environment, Altius has continued to move higher and now sits close to new highs.

That is not normal.
But Altius is not a normal natural resources company. It is a royalty and streaming business with exposure to long-duration resource optionality, inflation-linked assets, and structural demand themes across the commodity complex. The market is finally beginning to understand that distinction...

We recognized it early. Now, price is doing the talking.

So yes, Alternatives have been under pressure. Crypto has tested investor’s patience. Precious metals have corrected. And leadership has remained concentrated elsewhere.

But the setup is changing.
Bitcoin is testing major support. Silver is refusing to break lower. Altius continues to defy the broader cyclical weakness. And across the Alternatives bucket, the gap between sentiment and potential opportunity is becoming increasingly interesting.

That is exactly why we are paying attention.

Good investing!

Vasco Marques de Freitas, CFA, CMT

From Market View:

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

One of the strongest pillars supporting our Great Acceleration thesis has always been the labor market. And this week, it delivered another important piece of evidence.

The latest employment report came in far stronger than expected, with nonfarm payrolls rising by 172,000 versus consensus expectations of just 88,000.

Better still, previous months were revised higher and wage growth remained relatively contained. In other words, the economy appears to be accelerating without the kind of wage pressures typically associated with an inflationary boom.

Yet the market’s reaction was anything but constructive. Virtually every major asset class sold off as investors rushed to price in a more hawkish Federal Reserve. Treasury yields jumped, equities fell, precious metals weakened, and Bitcoin, one of the hardest-hit assets of the day, retreated sharply as traders suddenly began entertaining the possibility of additional rate hikes later this year.

The reaction was severe enough to draw a response from President Trump himself.

And while we rarely focus on political commentary, his remarks reveal that he understands exactly what happened.

Markets were not reacting to stronger growth. They were reacting to the belief that stronger growth would force the Fed to tighten policy once again.

Here, however, we continue to disagree with the market.

Our view remains that incoming Fed Chair Kevin Warsh is likely to prove considerably more dovish than investors currently expect. More importantly, we believe the market may still be struggling to distinguish between inflationary growth and productivity-driven growth.

Rising employment, subdued labor costs, improving productivity, and the accelerating adoption of AI are not necessarily ingredients for higher inflation. They may instead be laying the groundwork for stronger growth alongside lower inflation pressures than most investors currently anticipate.

Meanwhile, sentiment has deteriorated rapidly. Bitcoin, in particular, now finds itself testing an important support zone precisely as pessimism approaches levels typically associated with better long-term opportunities than risks.

Taken together, the latest economic data, the market’s reaction, and the growing divergence between fundamentals and sentiment are creating one of the most fascinating macro environments we’ve seen in years.

Which is why next week’s issue of VMF’s Strategic Asset Allocation will be particularly important. We’ll revisit some of our highest-conviction theses and assess whether recent developments are strengthening (or challenging) the framework we’ve been building for months.

Stay tuned.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

You might also like reading:

“The great obstacle to discovery is not ignorance... it is the illusion of

knowledge.” Daniel J. Boorstin

Before our Easter break, we devoted an entire issue of VMF’s Strategic Asset Allocation to a simple idea:

The market had become too blunt.

As AI capabilities accelerated, investors began treating large parts of the software sector as if obsolescence were already a foregone conclusion.

The market stopped distinguishing between fragile software businesses and deeply embedded enterprise platforms. If a company sold software, it was increasingly viewed as an AI loser.

That was the opportunity we identified.

And so far, the market is validating that view with force.

The daily chart below shows IGV ( ) , the vehicle we added to express this thesis. Our recommendation arrived almost exactly where the selloff exhausted itself.

What initially looked like a breakdown increasingly appears to have been a classic bear trap.

More importantly, IGV has now broken decisively above the resistance level we highlighted in April.

Our Model Portfolio position is already up roughly 36%.

And remember: this was a 4% allocation.

So, this was not a footnote. It was a meaningful Model Portfolio decision made precisely when the prevailing narrative around software was at its most pessimistic.

The weekly chart gives the move even more weight.

It places the reversal inside the timeframe that actually governs our investment horizon. And on that higher-level view, the message is cleaner still: IGV has reclaimed important ground, relative strength is turning higher, and the breakout is now visible across multiple timeframes.

That is exactly the kind of confirmation we want to see.

But the most interesting validation may not come from the chart at all. It comes from an AI-powered portfolio.

This week, the Claude Portfolio account highlighted ServiceNow as one of Claude’s highest-conviction positions.

Pause there for a second.

ServiceNow is precisely the kind of company many investors initially assumed AI would threaten. Yet here we have an advanced AI model effectively making the opposite argument.

And that is the whole point.

Building intelligent models is one challenge. Deploying them inside real organizations is another.

Enterprises still need workflow management, governance, permissions, audit trails, compliance controls, data integration, and operational orchestration.

In fact, as AI spreads through the enterprise, they may need more of those systems, not less.

That was the core of our April thesis.

The market focused almost entirely on who AI might replace. It paid far less attention to who would help companies deploy, manage, govern, and monetize AI at scale.

That distinction is now becoming visible in price. The software-is-dead panic looks increasingly premature. And as the charts in this update suggest, the market may finally be beginning to agree.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

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“What the market overlooks today becomes consensus tomorrow.”

Michael Mauboussin

Welcome to our weekly update - Week 22.

One of the most important developments in our Model Portfolio over the past few weeks has been the rapid confirmation of our newest addition:

,

IGV … our preferred way to gain exposure to what we have repeatedly described as the AI application layer in the United States.

The position is already up more than 25% in less than a month.

That kind of move tells you something important.

These leading software companies were far more punished, hated, and oversold than most investors realized. In fact, if you look closely at the chart above, you’ll notice something even more interesting about the timing of our entry.

We added IGV to the Model Portfolio precisely as it was breaking below what many technicians would consider a critical support zone: the 200-week moving average.

That level had held throughout virtually the entire cycle.

Normally, breaking such a widely watched long-term trend gauge would be interpreted as bearish. But we believed this was a false break. And the reason we had conviction in that view is because we never rely on technical analysis alone.

We reconcile technicals with fundamentals, macro, liquidity, and sentiment... the other pillars of our Investment Process.

Sentiment around software had become excessively pessimistic just as the AI narrative was becoming too narrowly concentrated around semiconductors and infrastructure.

Meanwhile, the application layer, the companies that will actually monetize AI productivity gains across the economy, was being discarded.

That disconnect created opportunity, and we believe the market is only beginning to recognize it.

Another recent addition to the Model Portfolio is also starting to show encouraging signs, although it has not yet delivered the type of relative strength we ultimately expect. We are referring to , our play on global healthcare equities.

Much like software, healthcare has lagged while capital crowded into the obvious AI winners.

But we continue to believe healthcare could become one of the largest beneficiaries of the AI productivity boom.

The ability of AI to improve diagnostics, drug development, operational efficiency, and administrative workflows could fundamentally reshape the economics of the sector over time.

And technically, the setup is becoming increasingly constructive.

Now, in our alternatives book, the picture has admittedly been less exciting.

Both our precious metals complex and our crypto exposure have lagged in recent months.

Bitcoin, in particular had started to show improving relative strength, but as the chart below illustrates, that momentum has recently faded again.

For now.

Because while the price action has cooled, the underlying backdrop continues to improve.

Regulatory clarity in the United States is slowly taking shape through initiatives like the Clarity Act.

Institutional support continues to broaden.

And perhaps most importantly, we believe the emergence of the Agentic AI economy could prove transformational for the crypto ecosystem.

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Why?

Because truly autonomous AI agents will require native digital payment rails, programmable value transfer systems, and machine-to machine economic coordination.

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In our view, that dramatically increases the long-term relevance of blockchain-based infrastructure.

While crypto has garnered far less attention over the past few months than many expected, we increasingly believe the foundations for the next major move are quietly being built beneath the surface.

And as always, we’ll be here to keep you posted.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

“Bull markets narrow before they end.”

Bob Farrell

The market’s rebound over the past two months has been extraordinary.

But what may be even more extraordinary is just how concentrated it has become. Take a look at the sector charts above. Out of all eleven major S&P 500 sectors, only one has managed to break out to new highs:

Technology.

Not industrials.
Not financials.
Not consumer discretionary.
Not communication services.

Just tech.

Tech is doing almost all the heavy lifting behind the major U.S. equity indexes now trading at all-time highs.

And the concentration becomes even narrower once we look beneath the surface. Because it is not “technology” broadly speaking that is driving this move.

It is semiconductors.

More specifically, it is the small group of companies at the epicenter of the historic AI capex boom currently underway.

The market has become obsessed with the picks-and-shovels layer of the AI trade: GPUs, memory, foundries, networking infrastructure, and hyperscaler capex.

That is precisely why we have spent so much time discussing the AI theme across our entire product roster.

But importantly, we have not approached it through the obvious consensus trades. We have been much more contrarian.

Take our latest addition to the Model Portfolio: , the software ETF.

We added it almost precisely when sentiment around software had collapsed and the group was being labeled an “AI loser” trade.

Meanwhile, capital was crowding aggressively into the already obvious semiconductor winners. But markets evolve. And increasingly, we believe we are beginning to witness an important rotation within technology itself: from the infrastructure layer of the AI boom toward the application layer.

From semiconductors… to software. You can already observe that shift emerging in IGV’s relative strength and price action. Interestingly, even elite investors are beginning to move in that direction. Bill Ackman just disclosed a position in Microsoft ( ) with a thesis that strongly rhymes with what we have been publishing for months:

That the real monetization opportunity in AI may increasingly accrue to dominant software ecosystems rather than only to the hardware suppliers enabling the compute buildout.

But if there is a new opportunity emerging inside technology, we must also pay attention to the other side of the trade.

Because some of the obvious AI winners are now becoming extremely extended. And nowhere is that more visible than in our South Korea position through - one of the best-performing trades of this cycle.

The move has been extraordinary.

Our initial recommendation is now up approximately 238%. But sentiment has also become extraordinarily euphoric, particularly among South Korean retail investors.

At the same time, major bearish divergences are beginning to develop across momentum indicators, even as price continues to press higher. That combination tends to appear late in powerful advances.

So, for risk management purposes, we have now closed the remaining EWY position in our Model Portfolio.

This does not mean the long-term AI story is over. Far from it.

It means the original thesis worked.

We wanted exposure to one of the less obvious bottlenecks in the AI buildout: South Korea’s memory and semiconductor ecosystem. The market eventually caught up. Then sentiment became euphoric. And when a position moves from misunderstood to widely celebrated, the job changes.

At that point, discipline matters just as much as conviction.

This is the kind of portfolio-management work we do every week inside VMF Research: not just identifying themes, but sizing them, tracking them, taking profits when risk/reward changes, and reallocating capital as the opportunity set evolves.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

“The real key to making money in stocks is not to get scared out of them.”

Peter Lynch

Last week, we asked a simple question: was the rebound a durable move… or just a reflex rally within a fragile structure?

This week, the market has given us an answer.

Take a look at the charts. They tell the story clearly enough. The pattern we have been highlighting (and, yes, predicting) over the past month and a half has now played out.

The S&P 500 not only held the key levels we were monitoring… it has surged back to all-time highs.

The T.A.C.O. hypothesis was not just a narrative framework. It was the mechanism. As financial conditions tightened (equities threatening to break down and long-term yields beginning to push higher) the political response followed.

The ceasefire served as a pressure valve. And once that valve was opened, markets did what they tend to do in these environments: they moved fast… and they moved hard.

But the most important point here is not that the hypothesis we shared across our product roster proved correct.

It is what we did with it. Because throughout the entire duration of this episode... while the risk-off wave intensified, while sentiment deteriorated, and while both professional and retail investors were selling in size... we did the opposite.

We increased our Model Portfolio’s overweight in equities.

And we did so in what were, at the time, deeply contrarian areas of the market. Geographically, we leaned hard into the United States. From a sector perspective, we tilted toward disruptive technology... precisely the long duration assets investors were most afraid of at the time.

That positioning is now beginning to speak for itself. The two positions we added during that period are already delivering returns that would normally take far longer to materialize. One is up approximately 18% from our entry.

The other is now trading roughly 28% above where we initiated the position.

We do not view that as luck. It is what happens when a framework, an investment process, and the fortitude to act are all aligned. Nor do we view this as a victory lap. If anything, it is a reminder of how these opportunities tend to appear: not when the narrative is comfortable… but when the pressure is highest and the consensus is leaning the wrong way.

And that brings us to the current setup.

Because while the index is now making new highs, the underlying environment remains far from resolved. The geopolitical backdrop is still fragile. The structural tensions we have been highlighting have not disappeared. And, as always, markets have a tendency to move ahead of clarity.

Which means the work does not end here.
If anything, it is just beginning.

Stay close to our work.

Good investing!
Vasco Marques de Freitas, CFA, CMT

You might also like reading

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

“In war, the first casualty is truth.”

Aeschylus

We waited one more day to publish this update.

And the reason is simple. We wanted more clarity… more color… on the evolving negotiations between American and Iranian authorities regarding the current conflict. In moments like this, the sequence of events matters just as much as the events themselves.

As you know, over the past few weeks we have been expecting some form of a TACO from the Trump administration. And, to a certain extent, it has already been delivered.

The two-week ceasefire, announced just as the S&P 500 was threatening to break down and long-term U.S. government bond yields were beginning to push higher, was not coincidental.

It was a response to tightening financial conditions and rising political pressure.

And markets reacted accordingly. Risk assets rebounded sharply, volatility compressed, and the immediate downside pressure eased.

That is what a TACO looks like in practice.

But as we sit here on Sunday afternoon, the situation remains unresolved.

There is still no durable agreement on the table.

And the Strait of Hormuz remains the central issue, not just for energy markets, but for the global economy more broadly. In other words, while the initial pressure valve has been released… the system has not yet been stabilized.

Which brings us to the current setup.

We believe this week’s price action will be particularly telling. Markets now have to digest a more complex reality: a partial de-escalation without a lasting resolution...

The key question is whether the recent rebound was the beginning of a more durable move… or simply a reflex rally within a still fragile structure. From a technical perspective, the levels just below the S&P 500 now matter even more. If they hold, the market may continue to build on the recent recovery. If they fail, we could quickly find ourselves back in a much more disorderly environment.

We are watching this closely.

Because beyond the short-term volatility, what matters most is that our pipeline of opportunities continues to deepen. Dislocations like these rarely come alone. They tend to cluster. And when they do, they create the kind of setups that define entire vintages of returns.

Stay close to our work.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

What if this is just Groundhog Day all over again?

Over the past week, investors have continued to grapple with the same central fear we highlighted in our last note: that the war with Iran, through its impact on energy prices, could tighten financial conditions further, deepen the ongoing risk-off wave, and push the market into a much more disorderly correction.

That risk remains very much alive.

In fact, despite some attempts by the Trump administration to soften its tone and scale down the conflict, Iran has shown little willingness to cooperate.

So, while we still believe the political incentive for another T.A.C.O. remains strong, the path toward de-escalation is proving neither immediate nor straightforward.

Still, the most important chart to watch right now may not be oil... but the S&P 500 itself. Take a look at the chart below.

As you can see, the current pattern is beginning to look eerily similar to the Liberation Day debacle of 2025, the episode that ultimately culminated in a major Trump pivot from Main Street to Wall Street.

Back then, the market rolled over, lost momentum, broke down, and eventually forced a response.

Today, we see a very similar setup unfolding once again: the index has broken below its 200-day moving average, momentum has deteriorated materially, and RSI is now revisiting oversold territory. In other words, we may once again be approaching the zone where financial markets begin to exert much greater political pressure.

And that level matters.

Historically, once the S&P 500 loses its 200-day moving average, the character of the tape can change quickly.

Volatility tends to expand, downside moves can accelerate, and investors begin to pay much closer attention to all the things they were previously willing to ignore. Add to that the fact that we are in a midterm year, which historically has not been especially kind to equity returns, and we believe it is highly unlikely that the Trump administration is oblivious to the risks associated with allowing this drawdown to deepen much further. So, our working hypothesis remains intact:

Trump will continue to press for a T.A.C.O.

In fact, if anything, the bar is now even lower for positive surprises. Sentiment is poor, the technical damage is mounting, and the market is increasingly leaning toward a more persistent and economically damaging conflict.

That is precisely why any credible signal of de-escalation, however imperfect, could still have an outsized impact on asset prices. We may be early once again... but for now, we continue to believe that the political, market, and economic incentives are all pushing in the same direction.

Meanwhile, while the broader risk-off wave continues to ravage financial markets, several pockets of relative and absolute strength remain visible in our Model Portfolios. Most notably, our overweight in energy equities continues to behave exactly as one would expect in this new market regime... as a true diversifier.

We will enter our Spring publishing break next week, and you can expect your next monthly issue on April 10.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

What a difference a month makes.

Not long ago, investors were still debating whether the next move would be a soft-landing melt-up or a healthy consolidation.

Now the market is gripped by something far uglier: a vicious risk-off wave triggered by the latest Trumpquake... the war with Iran.

Over the past week, the conflict has escalated materially, energy infrastructure has taken fresh hits, additional U.S. forces are heading into the region, and the market has moved from assuming a short, containable episode to pricing a more protracted confrontation.

Oil, of course, is reacting accordingly.

But the important point is that this is not just a front-month panic.

The message from both Brent and WTI is that the market is increasingly pricing a disruption that will not be solved in a matter of days.

Brent settled this week at $112.19, its highest since July 2022, while WTI’s active contract closed near $98.23... traders, strategists, and even the IMF are all now framing the duration of the conflict as the key variable for growth, inflation, and monetary policy.

Pictet’s own framework is consistent with that interpretation: the initial pattern is an inflation shock followed by broad portfolio de-risking, while its economists note that a permanent 30% oil shock would lift inflation and drag GDP.

And that is precisely why equity markets are responding so negatively.

Higher oil prices are now large enough to revive a very old fear: that what starts as an energy shock quickly mutates into a growth shock.

JPMorgan has warned that stock/oil correlations typically turn much more negative after roughly a 30% oil spike, and that four of the last five major oil shocks since the 1970s were followed by recession.

But here is where we begin to diverge from the consensus.

As you know, we have been arguing that the bar is now low for positive surprises... in growth, in liquidity, and yes, even in inflation.

These weekly notes are not the place for a full exposition, we will save that for the monthly issues.

But consider the setup.

Gasoline prices have surged by nearly $1 per gallon since the war began. 55% of Americans already say rising fuel costs are hurting their household finances.

Trump’s approval on the cost of living has fallen to 29%, and only 35% approve of his handling of the economy. Meanwhile, the administration is already reaching for relief valves: it has lent 45.2 million barrels from the SPR and is discussing more measures to cap the damage.

The market is also flashing stress: the S&P 500 has now logged a fourth straight weekly decline, hit a six month low, and slipped below its 200-day moving average for the first time since the Liberation Day debacle.

So, here is our working hypothesis: we believe we are moving toward another T.A.C.O. moment... another moment when Trump, faced with rising gasoline prices, rising yields, a stumbling stock market, and a politically costly war, tries to frame the mission as accomplished and pivot toward de-escalation.

Reuters reports that some White House aides are already urging him to find an “off-ramp,” and that declaring victory and walking away is one of the live options now on the table.

That is a contrarian call, because sentiment is already deeply pessimistic and the market is increasingly leaning the other way. We may be early... but we will be here to stand accountable for the claim.

Good investing!

Vasco Marques de Freitas, CFA, CMT

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

But as we argued in the latest monthly issue of VMF’s Strategic Asset Allocation, the bar is now very low for positive surprises.

And that matters.

Because when positioning is defensive, sentiment is fragile, and expectations have been pushed down far enough, it often takes far less good news than people imagine to trigger a meaningful move in the other direction.

That potential rebound could also come with an added layer of comfort: the S&P 500 is approaching an important support zone.

And when you go one level deeper, breaking the index down by sector, the message becomes even clearer.

Several of the market’s larger sectors are also now trading near support, which suggests that this is not just an index-level technical observation.

It is a broader market condition.

At that same sector level, the current leadership is also telling.

Energy has been leading, which is hardly surprising given the geopolitical events unfolding before our eyes.

But alongside that, the market has also been rotating into more defensive groups, particularly consumer staples and utilities.

That is usually what investors do when they want exposure, but want it with a helmet on...

And yet, we continue to stand by the claim that the bar for positive surprises is low. In fact, that view is reinforced by what is happening in the realm of implied volatility, and particularly in the VIX.

As you can see in the chart, the VIX has not only printed lower highs relative to last year’s Liberation Day episode, but the candlestick pattern surrounding both events is also notable.

In both cases, we see a dark cloud cover pattern emerging... a setup that could point to lower volatility in the weeks ahead, which in turn would be consistent with higher equity prices.

Still, we do not expect the next risk-on wave to look exactly like the last one.

In fact, we suspect it may come with an important rotation in relative strength... across geographies, sectors, and risk factors.

And if the Dollar pattern is any guide, that next phase may well prove more favorable to the U.S. than many currently expect.

Stay tuned.

Good investing!

Vasco Marques de Freitas, CFA, CMT

You might also like reading:

Check our Leaderboard updates - Top 10 Positions - February 18th, 2026

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

Long before this latest Middle East shock hit the front pages, we were already positioned for it.

Back in our December 2025 Alpha Tier issue, we called energy “the quintessential contrarian trade” for 2026. At the time, that was not the comfortable call. It was the kind of call that makes people raise an eyebrow when you publish it… and nod after the market does the talking for you.

Well, the market is talking now.

So today I’m sharing something different. Not a polished monthly essay written with the benefit of hindsight. But the actual Weekly Update our subscribers receive inside VMF’s Strategic Asset Allocation when markets are moving fast, headlines are flying, and portfolios need to be read in real time.

That’s the point of these updates.

They show subscribers what matters, what doesn’t, what the market is quietly signaling beneath the noise, and how those signals are affecting our Model Portfolio as events unfold.

The update below, dated March 7, came after a week in which geopolitics hit global markets like a sledgehammer. Oil surged, of course. But so did the consequences across bonds, currencies, equities, and inflation expectations. And in moments like this, the edge is not reacting faster to headlines. The edge is having the right framework before the headlines hit.

Here is the latest Tier One Weekly Update.

It was a risk-off week across global financial markets, and the catalyst needs no elaborate introduction: the U.S. & Israel attack on Iran sent shockwaves not only through the obvious place, oil, but across currencies, bonds, equities, and inflation expectations as well.

Still, our Model Portfolio continues to show several pockets of strength… and one above all: our overweight in the energy sector.

That has become the clearest vindication of a call we made back in December 2025, when we described energy in Alpha Tier as the “quintessential contrarian trade.”

At the time, the consensus was still leaning the other way. Even J.P. Morgan was laying out a path in which Brent could sink into the low $30s by the end of 2027.

Fast forward to Friday, and Brent closed around $93.60 while WTI ended near $91.62. That is no tjust a move. That is a message.

But amid all the media frenzy (and, frankly, all the noise) it helps to listen to what the market itself is saying.

And right now the message is remarkably clear: the Brent forward curve is in deep backwardation.

That matters because the curve is telling us something very specific: the stress is in the present, not yet in the distant future.

The market is paying a steep premium for barrels available now, while prices further out remain far more restrained. In fact, even after this week’s surge,

Brent for delivery at the back end of 2026 is still only a little above $70.

In plain English: oil for immediate delivery has become dramatically more expensive, but the market is still not convinced this will evolve into a lasting structural shortage.

And that, of course, is the great unknown hanging over markets right now: duration.

Because that is what will determine everything that follows.

How long does this war last? What does it mean for inflation?

Does it alter the path of monetary policy at all?

And how far do the consequences spread across broader value and supply chains... not only in oil, but in LNG, fertilizers, and other critical inputs that depend on flows through Hormuz?

Those are not peripheral questions...

They are the macro questions now.

We’ll address all of them in our next monthly issue, due next Friday, March 13.

For now, what matters is that our energy sector play continues to press new highs... the natural consequence of a well constructed Model Portfolio and a Strategic Asset Allocation tuned for a Fourth Turning world.

Sometimes the market tests your patience first.

And then it rewards your conviction.

Good investing!

Vasco Marques de Freitas, CFA, CMT

You might also like reading:

Check our Leaderboard updates - Top 10 Positions - February 18th, 2026

Looking for where to start?

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.

Winners keep winning. Losers keep losing. And if you flip to the last page of any of our monthly issues, you already know the punchline: our portfolio is heavily skewed toward the winners’ side.

And right now, nowhere is dispersion more visible than in our geographic tilts.

South Korea (EWY) has turned into a market darling almost overnight because it happens to sit right on top of the AI capex wars. Samsung and SK Hynix aren’t just “AI stories” in the way headlines frame them… they’re the industrial backbone powering the buildout.

When the world decides it needs more compute, more memory, more chips… Korea doesn’t just participate, it supplies. And that’s why capital is flooding in.

Meanwhile, Brazil (EWZ) and Japan (EWJ) are doing almost the same attention-grabbing thing: they’re going parabolic. Different reasons… same result.

Brazil’s thesis, in particular, is now capturing even Stanley Druckenmiller’s attention. Which is always a fun moment… because, well… we were there first.

Stay tuned for our next monthly issue: we’ll update the Brazil thesis properly, with the same sober reality we always bring to these moves: big trends don’t start when the crowd notices; they start when positioning is still lonely.

Now, on the other side of dispersion, our crypto exposure continues to take punches. No sugarcoating it. But our conviction hasn’t budged. Why? Because the market is still missing the obvious: the Agentic AI revolution doesn’t just need intelligence: it needs ownership, coordination, incentives, identity, and settlement in a digital world where agents act, transact, and negotiate at machine speed.

That’s where blockchain stops being a “theme” and starts becoming infrastructure. The connection will look inevitable… right after it stops being controversial.

That’s good investing: you lean into what’s working, you size risk properly, and you stay rational when the market is doing its best impression of a mood swing...

Stay disciplined. Have a great week.

-Vasco

Disclaimer

The information provided herein is for general informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any investment. It is not tailored to any specific individual or investor profile. All investments involve risks, and past performance is not indicative of future results. Before making any investment decisions, it is important to consider your own financial situation and risk tolerance. We do not guarantee the accuracy, completeness, or reliability of any information provided, and we disclaim any liability for any loss or damage arising from reliance on the information herein. Readers are advised to consult with an authorized financial intermediary before making any investment decisions.