Summary: Much of 2024 was governed by fluctuating probabilities between a soft landing, a hard landing, and a return of inflation. Markets behaved quite well in this environment, unsurprisingly, as the only thing markets participants feel stronger about than uncertainty is a resolution to that uncertainty. Ultimately, Fed policy helped keep a lid on inflation while re-steepening the yield curve, which suppressed long duration bond indices (the only asset class mentioned above to yield a negative return). Risk assets outperformed.

Performance: 2024 marked the first year that a positive return for Jasper Capital did not exceed 100%. Not every year can be a blowout year, and this election year provided several trends that were difficult to predict. As mentioned in previous quarters, the strongest headwind to the generation of additional alpha was premature allocation to high beta risk assets around an intermediate top. The fund was able to generate additional gains via leverage to somewhat compensate for the lackluster performance mid-year, but overall the impact was not sufficient enough. On the bright side, Jasper Capital outperformed other broad assets classes by at least double, apart from bitcoin. 

Outlook: The early goings in 2025 will be entirely focused on Trump’s ability to enact his policies, followed by the actual impact of those policies. It’s going to be a difficult battle for the administration if their goal is to keep markets strong. Several sectors that typically lead the economy are showing erosion, such as homebuilders and used cars. I enter the year bullish with an increasingly cautious stance as 2025 progresses. It would not surprise me if a liquidity event reared its head sometime around mid- to end-year.