The European Economy’s performance has always been kind of like your friend who peaked in high school. Once the envy of the global class, their skills at beer pong have gone from impressive to, well, just kind of sad. They’ve spent the past few decades struggling to keep pace while watching former peers (the US and China) become increasingly successful.
For the EU, the yearbook photos look great, but the reunion is…uncomfortable.
But hope is not lost, it’s possible Europe can turn crisis into opportunity – a stint in regulatory rehab, perhaps, and a boost of motivation from an old orange-tinted rival might be exactly what they need. What was once unthinkable in EU policy circles — large deficits, joint debt issuance, and expansive state aid — has returned to the zeitgeist as policymakers turn the fiscal taps back on to fortify the economy’s foundations.
What is “Fiscal Primacy”?
Eighteen months ago, we penned our magnum opus on a megatrend that was reshaping the U.S. economic landscape: Fiscal Primacy.
“We have entered a new fiscal and geostrategic regime that will be markedly different than the previous decade and see government spending exercising a persistently outsized role in corporate profit trends. The pandemic accelerated powerful fiscal and economic shifts already underway, heralding a new era that could bring meaningful change to both the micro and macroeconomic landscape.”
US Fiscal Primacy: Investment Implications in the Fiscally-Led US Economy
We contended in the piece that the sectoral tilts of U.S. Fiscal Spending would become a major driver of equity returns, as a “crowding-in” of capital into the shares of companies with the fiscal buffer to avoid a potential recession drove prices higher.
In mere weeks, President Trump has upended decades of geopolitical and economic precedent. Much of investor focus has centered on what the U.S. policies mean for its own economy and towering equity market, but what does America’s turn inward mean for the rest of the world – particularly U.S. allies who have long been content under the umbrella of U.S. military protection and drafted in its economic wake?
Global Vibe Shift
Europe has awoken to a new global reality, laying bare the fifteen years of underdevelopment and deindustrialization that has defined the post-GFC era. A change in direction ultimately requires a shift in policy attitude from the austerity era.
As the market deals with the realities of increasing U.S. isolationism and protectionist trade policies, we believe that fiscal primacy has crossed the pond.
For quite a while, it just wasn’t that convincing to be allocated to European equities. The AI buildout sucked in capital and, for a while, it seemed like the U.S. was the only game in town. Having already allocated to Chinese equities, the proposition of increasing our pain with European ones seemed…unenticing.
However, that seems to be changing. And while you might need a magnifying glass to see it, equity markets are beginning to look internationally for opportunities.
Zooming in…
With the market more receptive to European equities than at any point over the past four years, we’re basing our investment approach much like we have with many other themes.
First, we’ve waited until there is ample interest to sustain the theme. With China and the EU seemingly diverging in both macro (weaker growth, lower inflation) and equity performance from the US in 2025, there seems to be no shortage of investor interest.
And while a valuation discount is not a reason for stocks to go up now, EU stocks have begun rerating slightly but are nowhere near closing the gap. The discount to the U.S. markets does look quite attractive if the sentiment surrounding the primary driver of U.S. rerating (AI Capex) continues to see reduced interest and uncertainty surrounding U.S. fiscal plans continue to trend uncomfortably for investors.
Second, we’ve found a touchstone to formulate a strong framework based on the goals, incentives and agendas of the key players. Whether it’s fiscal policy in the EU or the US, AI Capex, Electrification…
"The game is the game. Always."
-Avon Barksdale, The Wire
Playing Europe: Beyond EU Defense
Recent Developments
As America has made clear its intent to end military support to Ukraine, the most obvious implication has been in the defense sector. And European Defense began to run on the election results before ripping over the past two weeks on the U.K. and EU’s declaration to fill the U.S. voids, even with “boots on the ground and planes in the air”. We are not strangers to the EU Defense trade.
In fact, we included long EU Defense/Short US Defense as part of our GOP vs. Democrat Election Basket a year ago today. Our outline for how Trump’s presidency could impact EU Defense stocks was a call that ultimately proved prescient:
“A GOP win, especially with Trump, could strain transatlantic relations and spur European countries to increase defense spending. This would likely benefit European defense contractors. Donald Trump’s recent comments on NATO and the 2% GDP defense spending requirement have reignited discussions about the financial contributions of NATO members to their defense budgets”
View our March 2024 EU Defense Basket
While increased defense spending is likely to continue, we believe the implications are much broader and likely to echo impacts similar to US Fiscal Primacy. The changes being made that are currently driving the massive outperformance in the European defense complex should soon spillover into an improved attitude towards other badly neglected areas of the Eurozone economy (especially in Germany).
It’s not merely a question of military revitalization, but a wider recognition that deindustrialization and aging infrastructure has left the continent vulnerable and reliant. Beyond that, it is the change in attitude that could present massive re-rating for equities, if delivered.
Crucially, this new European fiscal era is about more than just short-term stimulus — it marks a strategic repositioning of the continent in a fraught global landscape. Following Russia’s invasion of Ukraine, EU leaders grasped that the old assumptions of cheap security and frictionless globalization no longer hold. In response, they are pouring money into bolstering supply-chain resilience and technological self-reliance.
A much greater force is required to reestablish a strong and self-reliant Europe: EU fiscal primacy. We believe that any renewed interest in Europe as a destination for investment dollars will be spent primarily along the sectoral lines laid out by Draghi’s September report.
European leaders have little choice, but they do have ammunition with the right decisions.
The largest European economies now compare favorably to the U.S. in key macroeconomic metrics that support a pivot towards larger fiscal outlays.
As the Post-COVID inflationary pressures continue to ease, lowering rates across the continent, the ability to begin to push on fiscal spending to achieve these critical national security goals grows.
Productivity Pivot
“Anyone who lives within their means suffers from a lack of imagination.”
— Oscar Wilde
Over the past fifteen years, fiscal policy in Europe has wrestled between austerity and fiscal outlays that have primarily focused on social or environmental goals – both contributing to the decline in global competitiveness. Underinvestment, burdensome regulations, declining demographics and weak productivity have compounded these problems.
Even in its response to COVID, Europe demonstrated far more restraint than the United States, contributing to tepid real growth over the past several years. The growing gap in growth and productivity hangs over the continent.
EU fiscal rules, or “debt brakes” have served their purpose in limiting fiscal largesse, but also have hamstrung investment. These fiscal rules, outlined in the Stability and Growth Pact (SGP), are designed to limit government borrowing and ensure sustainable public finances across the European Union, including:
If a country breaches the deficit or debt limits, the European Commission can require a country to implement corrective measures or face financial sanctions.
But European leaders have seen the writing on the wall, and are preparing a new path forward with fiscal spending front and center. The Future of European Competitiveness, published in September 2024, lays out four “building blocks” to close these gaps:
Single Market: Doubling down on its strength in scale, and cooperation, a deeper embrace of a single market philosophy enables scale for innovative companies and large industrials that compete on global markets. Further unifying the economy will diversify the energy market, streamline transport and strong demand for decarbonisation solutions, lead to preferential trade deals and build more resilient supply chains. It will serve to encourage private financing, unlock higher domestic demand and investment.
Industrial Policy: Strong and unified industrial policy is critical. Policy should focus on sectors rather than companies. For priority sectors, the EU should aim as far as possible to be competitively neutral and regulation should be designed to facilitate market entry.
Financing: Europe now faces massive investment needs unseen for half a century. To digitalise and decarbonise the economy and increase the EU’s defence capacity, the total investment-to-GDP rate will have to rise by around 5% of EU GDP per year to levels last seen in the 1960s and 1970s. However, the private sector is unlikely to be able to finance the lion’s share of this investment without public sector support. Increasing productivity will be key to ease constraints on fiscal space for governments and enable this support.
Reform: Regulation is seen by more than 60% of EU companies as an obstacle to investment, with 55% of SMEs flagging regulatory obstacles and the administrative burden as their greatest challenge. Overall changes need to occur and the collective and local level
In short, a pivot to productivity will require greater unification of resources, reduced regulation, and intensive investment into strategic sectors.
Echoing these sentiments, the European Commission’s “Compass to regain competitiveness and secure sustainable prosperity” published in January 2025 argues for a bloc-wide realignment in priority and perspective - one that must begin now.
“Europe has everything it needs to succeed in the race to the top. But, at the same time, we must fix our weaknesses to regain competitiveness. The Competitiveness Compass transforms the excellent recommendations of the Draghi report into a roadmap. So now we have a plan. We have the political will. What matters is speed and unity. The world is not waiting for us. All Member States agree on this. So, let's turn this consensus into action.”
Action is now being announced at a faster pace, relative to what we’ve seen in Europe over the past decade.
This won’t be an immediate change, of course. It’s more like turning around the titanic after it has hit the iceberg…
But markets respond well to incremental changes. Especially in places where they previously had no hope for improvement.
In September 2024, it became increasingly clear what a roadmap to a functional Eurozone productivity pivot might look like with the release of Mario Draghi’s report “The Future of EU Competitiveness”.
Draghi’s Productivity Pivot seemed to lack the will to achieve it, that is, until recent announcements.
Formulating a Framework: The Draghi Report
The Draghi Report presents three fundamental insights:
Europe's core challenge is its sluggish productivity growth over the past two decades
This must be addressed through sector-specific industrial policies, not just general reforms
Solving the productivity crisis requires both massive new investments and a selective trade policy response
What makes this approach different from previous EU initiatives is its "connected policies" framework—recognizing that policy objectives (like the green transition or defense) cannot succeed without corresponding industrial reorganization.
For instance, despite being a global priority, Europe's green transition has failed to deliver cheaper energy for consumers or establish technological leadership. Europe has reduced its CO2 emissions largely by outsourcing manufacturing to China. Now China is the leader in green energy technology. As Draghi puts it “There are some technologies, like solar panels, where foreign producers [i.e., China] are too far ahead and attempting to capture production in Europe will only set back decarbonisation.”
The Draghi Report provides a powerful sectoral lens through which to view European investment opportunities. Rather than applying broad macroeconomic solutions, Draghi emphasizes targeted interventions in specific sectors where productivity lags—creating an actionable framework for investors to identify potential winners from the proposed €750-800bn annual investment program.
This makes it relatively simple for us to view exactly how a renaissance in European fiscal priorities might impact equities, and create a broad basket as we did with our US Fiscal approach:
Policy Pillars
We believe the most direct and immediate implementation of this pivot can be grouped into three pillars; Military Defense, Reindustrialization and Reversing Headwinds, and Rebuilding Ukraine. These are the pathways along which further fiscal outlays can be framed and planned according to Draghi’s vision.
The total of recent policy announcements and estimated rebuilding costs amount to trillions of near and long term investment.
Military Defense
The European Commission has proposed significant changes to EU budget rules to accommodate increased borrowing for rearmament. These proposals include allowing member states to exceed traditional deficit limits for defense spending, reflecting a collective acknowledgment of the need to enhance military capabilities amid evolving security threats
Germany, traditionally an advocate for fiscal conservatism, has announced a major policy shift under incoming Chancellor Friedrich Merz. The government plans to establish a €500 billion infrastructure fund and increase defense spending, potentially reaching 3.5% of GDP by 2027. This move involves reforming the country's "debt brake" to allow for increased borrowing, particularly for defense expenditures exceeding 1% of GDP. Merz's strategy reflects a response to the withdrawal of U.S. military support for Ukraine and concerns over NATO's reliability, signaling a commitment to bolster European security.
In response to the suspension of U.S. military aid to Ukraine, the European Commission President Ursula von der Leyen has unveiled an €800 billion plan titled "ReArm Europe" to bolster Europe's defense capabilities and provide urgent military support to Ukraine. This strategy includes €150 billion in loans for defense investments and suggests €150 billion of new joint EU borrowing to fund defense initiatives such as air and missile defense systems, artillery, missiles, drones, and ammunition. The plan aims to increase interoperability, reduce costs, and strengthen the defense industry, reflecting Europe's commitment to enhance its defense autonomy amidst criticisms of underpreparedness and dependency on U.S. support.
Source: Statista
This initiative seeks to enhance Europe's defense capabilities and provide urgent support to Ukraine. A key component of this plan is the proposal to relax existing fiscal rules, allowing member states to increase defense spending without breaching EU budgetary constraints. The EC suggests that defense expenditures should be exempt from the Stability and Growth Pact's (SGP) deficit and debt limits, facilitating higher military investments. The plan is based on four tenets:
Fiscal Flexibility for Defense Spending: The plan proposes invoking the national escape clause of the Stability and Growth Pact, allowing EU member states to increase defense expenditures without triggering excessive deficit procedures. This measure could potentially create fiscal space of approximately €650 billion over the next four years.
Joint EU Borrowing for Defense Investments: The European Commission intends to borrow €150 billion, to finance critical areas such as air and missile defense systems, artillery, drones, and cyber defense capabilities. This approach mirrors the structure of the COVID-19 recovery fund, where member states negotiated debt reduction paths with the Commission, subject to approval by EU ministers, and enable countries to undertake necessary defense investments while adhering to a structured fiscal framework.
Collective Procurement and Enhanced Interoperability: By pooling resources and coordinating defense acquisitions, the EU is in effect seeking to consolidate its military forces into a more cohesive and powerful unit
Mobilization of Private Capital: The plan includes measures to attract private investments into the defense sector, further augmenting the financial resources available for enhancing Europe's defense infrastructure.
Reindustrialization & Reversal of Headwinds
Even as detrimental energy policy cannot be quickly reversed, large scale fiscal investment will still kickstart industrial activity. Reindustrialization will materialize in both traditional hard infrastructure and technology. Companies have suffered tremendously from European deindustrialization, with approximately 6% of European chemical capacity has already been announced for closure/review.
Relative to its €4.5 trillion GDP, this stimulus package is similar in scale to the combined authorized spending of the $891 billion Inflation Reduction Act (IRA) and $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) enacted in the United States in 2021 - 2022.
We see this trend benefitting European industrials, diversified chemicals and construction companies, mirroring the profitability boost seen stateside from infrastructure spending. Indeed, German construction industry association Bauindustrie welcomed the proposals as “groundbreaking” and “essential”. Given valuations, we believe the risk reward is more skewed to the upside in these areas than the ongoing EU defense trade.
Rebuilding Ukraine
Finally, regardless of the timing or terms of a ceasefire in Ukraine, three years of destruction have left a brutal toll on the country and its infrastructure. With exhausted local resources, the rebuilding of Ukraine remains a growing task that must be footed largely by international allies.
As of February 2025, the estimated cost to rebuild Ukraine's economy after Russia's invasion has risen to $524 billion, according to a joint assessment by the World Bank, United Nations, European Commission, and the Ukrainian government, showed an increase of over 7% from the last estimate of $486 billion one year ago, with housing, transport, energy, commerce and education being the most affected. Per Reuters reporting, About 13% of Ukraine's total housing stock has been damaged or destroyed, affecting more than 2.5 million households.
This estimate is approximately 2.8 times the estimated nominal GDP of Ukraine for 2024, emphasizing the necessity of foreign investment.
Each of these pillars demands enormous investment, which there is newfound political will to address. Securing a demilitarized zone would likely require an additional 10% of this commitment per year. This reality is only beginning to be priced into markets.
Here is how we are trading it.
Our EU Fiscal Primacy Basket
Our first fiscal policy basket - our “Fiscal Policy Investable Universe” – was a broad list of stocks we believed would see material outperformance as beneficiaries of US government deficit spending initiatives.
Our basket of winners excelled during the Biden Administration, as massive infrastructure outlays propelled a range of industrials and capital equipment names. A dash of AI beta only supercharged this. The main risk, of course, was always a shift in US Government attitudes towards deficit spending. It’s not hard to see on the chart where that risk was realized:
Looking at our original universe of IRA/IIJA/CHIPS act winners, it’s quite obvious what ended its run – this broader basket peaked right as Trump won a massive victory. By shorting some classic IRA/IIJA winners in our actively managed and narrowed Fiscal allocation (published as part of our Citrindex), we’ve largely avoided this fate.
Six months after our “US Fiscal Primacy” piece, exactly one year ago today, we published our market neutral Trump Long/Short basket. Our reasoning behind positioning for a Trump victory had less to do with predicting the election and more to do with providing a solid way to stay allocated to these US Fiscal Winners that had been newly minted as AI-adjacent Industrials, while recognizing the risk presented by challenges to Bidenomics.
We have always viewed thematic exposures as having some factor/nature that can result in an attractive hedge to our broader portfolio. A prime example of this has been our thesis that our Chinese Equity Basket (a play on stimulus we’ve held for a year and a half) has functioned as a hedge to our US momentum longs. This has played out very well for the past 6-9 months. We see a similar trend emerging here.
Look at the performance of our EU Fiscal Primacy Basket versus the performance of our US Fiscal Primacy Universe:
Interesting, right? They’ve tracked quite closely, but the EU had a massive hit that coincided with increasing odds for Trump’s election that has corrected quite rapidly since his inauguration. While we continue to believe in long term opportunities in AI that are primarily centered in the US, we think adding some exposure to the EU managing to pull off this fiscal shift (or investors believing they can) is prudent.
Our EU Fiscal Primacy basket is designed to benefit from both current and expected changes to EU Fiscal policy, as well as align well with where investors will be looking now that the EU Defense trade begins to broaden out. While we certainly don’t doubt large EU Defense names like Thales, Rheinmetall and Safran could go higher (5% of German GDP spending on Defense probably makes RHM a --3000EUR stock), we believe there’s more upside in playing it this way from here:
View our EU Fiscal Primacy Basket
We don’t know for sure what the end result of the current trade and foreign policy conflict will be, perhaps Europe fails in its efforts to catch up. But right now, the U.S. is looking increasingly uncertain and the EU is looking like a company headed to bankruptcy that just secured a capital infusion. The leverage is clear.
Our Equity Positioning: Concluded
Global alignments are shifting. America First has forced the Sick Men of Europe to confront its diagnosis and prognosis, daunting but not yet fatal. Don’t expect the continent to drift quietly into the night. This reflection is necessary and overdue, but a tangible course correction is underway. We see opportunity and are playing it by aligning our Fiscal Primacy basket with the primary beneficiaries of the likely next steps for European priorities. We are not making bold calls on Europe emerging from its decades long slumber or completely pivoting the trends in their policies - we are playing an incremental improvement that is likely to continue being regarded as positive by the market.
Our Eurozone Macro Views
Marshall Plan 2.0 “MEGA” - Make Europe Great Again
“Whatever it takes” on monetary policy meets “whatever it takes” on fiscal policy. The willingness and ability are now coming together.
Since the Eurozone hasn’t had an established fiscal union, the ECB has historically asserted a fair amount of unilateral control. In his time as ECB president, Mario Draghi implemented legally creative monetary policy tools that created a de facto fiscal backstop for Eurozone countries.
Draghi’s unconventional ECB programs, while controversial, were designed to prevent the Eurozone from breaking apart, and have ultimately been accepted under the European legal structure. Today, the threats to the Eurozone are not from within (Grexit, etc.), rather they are from the outside. The motivations, and the willingness to pull monetary policy levels, will be at least as strong–the threats remain existential.
Instead of the Troika ganging up on member nations, member nations are now looking to band together against a common foreign threat. In the Troika, the ECB always played the role of the QE carrot (to the IMF’s austerity stick).
In contrast to the 2010s, which were dominated by Draghi at the helm of European monetary policy, the 2020s will be about European fiscal primacy (with monetary policy playing a supporting role if and as needed).
Bazooka to finance bazookas
Short of agreement on issuing common debt to fund a Marshall Plan 2.0 initiative, it does not take a lot of imagination to envision country-level issued bonds being eligible for QE/OMT purchase by the ECB provided that the countries invest in defense, industrial, and innovation initiatives outlined as key European political necessities. This would be similar to other unconventional monetary policy initiatives in the past–ECB support is “conditional.” Any hiccups in national bond markets (i.e., country spread blowout) on the back of increased debt issuance to finance ReArm Europe could be swiftly dealt with by the ECB and may create future trading opportunities. With the European Commission fully behind the initiatives and setting the conditions, the ECB will not hesitate to use the monetary bazooka.
After being ECB president, Draghi became the Prime Minister of Italy. In 2021, he co-authored an op-ed in the FT with French President Emmanual Macron advocating for fiscal policy activism. France and Italy are the second and third largest economies in the Eurozone. Germany, the bloc's largest economy, is now singing a similar tune.
Where there’s a will there’s a way. In the 2021 op-ed, Drahi (and Macron) noted that the European response to the pandemic showed the power of bold and coordinated fiscal policy action. During the response to a global pandemic, the European fiscal rules were suspended and joint debt was issued. The response to Covid created the fiscal playbook on the financing side.
Indeed, in the 2021 oped, Draghi suggests that the fiscal response to the pandemic crises be used as a blueprint for broader European fiscal policy investment initiative on the order of the Marshall plan. The pandemic triggered the first ever activation of the general escape clause of the Eurozone fiscal rules. If common debt can be agreed it may well take the form of The Next Generation EU program. The “EU Bonds” issued under that program trade with yields that are roughly the average of German, French, and Italian yields.
In our view, Maastricht Treaty fiscal rules, namely 3% deficit to GDP and 60% debt to GDP limits, were arbitrary and never well-grounded in macroeconomics. “Fiscal space,” the ability for the governments to engage in deficit spending, is more driven by inflation and real resource economics than it is by artificially imposed financial levels.
Turning from Financing to the Supply-side
In his book How to Pay for the War, Keynes notes that resource allocation, not finance, is the primary challenge. Spain for example, the Eurozone’s fourth largest economy, has an unemployment rate that is still above its pre-GFC level, with unusually high youth unemployment. As Draghi writes in 2024, “we must exceed on education and adult learning. We therefore propose a profound overhaul of Europe’s approach to skills, focused on using data to understand where skills gaps lie and investing in education at every stage.”
Right now, the Eurozone does not have an inflation problem. Other problems are clearly much more of a concern. Furthermore, the ECB has already eased their inflation mandate from “close to but below 2%” to merely “2%.” 5y5y inflation swaps, Draghi’s favorite inflation indicator as ECB president, remain well-anchored near the ECB’s target.
Germany, and Europe more broadly, appear to have room to increase production. Capacity utilization is at recessionary levels.
On FX:
If natural gas prices are falling, that’s bullish for the euro. Peace in Ukraine and re-normalization of trade relations with Russia would bring down European energy prices. In 2022, Europe experienced a major terms of trade shock that briefly took their current account balance negative. The EUR vs the USD is also supported by the general direction of travel between German 10yr yields (higher) and US 10yr yields (lower)–the same is true when looking at 10yr real rates (often more relevant). In the near-term, German yields look set to extend higher. After a long period in contractionary territory, German manufacturing PMIs and the ZEW survey suggest a cyclical upswing may be underway.
As a contrarian indicator, speculative positioning also currently favors a stronger euro. Net speculative positioning in euro futures has been negative over the past few months–recently reaching the most negative in five years.
As it relates to Eurozone internal rate dynamics, the EUR.USD pair is less driven by Italian-German yield spreads and more driven by Italian-German bond correlation, with negative correlation representing existential breakup risk. Even though the Italian-German spread is widening, the correlation between Italian and German bonds remains highly positive. As such, the widening Italian spreads are not necessarily a negative for the euro. Today, we see Europe with greater integration interest–galvanized by America First foreign policy out of the US, an ambitious Putin, and a strong Xi.
The near-term target on EUR.USD is 1.15–back to the line. The historical mode and long-term relative purchasing power parity fair value also support such a move.
Our current FX exposure is currently 50% Long JPY, 50% Long EUR and 100% Short USD.
One slight sleeper play on the Ukrainian detente/rebuild is the Hungarian Forint - Hungary already has substantial trade ties (approximately 3.5bn pre-war) with Ukraine that could expand rapidly during the process of rebuilding. Despite Prime Minister Orban’s complex EU relationship, Hungary is a natural mediator that is not plagued by the issues that make Turkey too difficult to trust geopolitically. Foreign investment into Hungary could increase in preparation for the rebuild.
HUFEUR has been steadily climbing YTD, perhaps in anticipation.
On STIR:
On the macro side, we’d rather continue to play STIR expectations on Euro vs. US than play around with BTP-Bund spreads or bonds. We continue to maintain our position long December 25 SOFR (SFRZ5) short December 25 EURIBOR (ERZ5), which we put on originally
Still, it’s likely that bunds have more downside from here.
Macro Equities – RoW vs US
In the macro aggregate, fiscal deficits are a driver of total corporate profits. More government spending means more corporate profits to be had. After 15 years of steady underperformance, the rest of the world might finally durably break out vs the US. The below chart shows the ratio of MSCI ex-US to MSCI US and is in log scale with a regression line plus and minus one and two standard deviations.
Addendum: Checking on Other Policy Baskets
We’ve made quite a few baskets playing various policy shifts - everything from playing Chinese Demand Side vs. Supply Side Stimulus to Trump’s Trade and Tax Policy to US Fiscal and more.
We felt it would be an interesting addendum to display how those baskets have fared. Obviously, leading all of them YTD is the EU vs. US Defense basket from our Election primer, as well as both implementations of our Republican/Democrat Long/Short baskets. Predictably, towards the bottom we have IRA-beneficiary heavy baskets like our Fiscal Universe and also some areas of the Trump trade which may have run too far, too fast like M&A focused Financials and LEO/Prison names such as GEO and AXON.
The Citrindex is updated with our changes to our actively managed Fiscal Primacy basket and recent changes made during the US drawdown as-of March 5th, 2025.
