Passaic Partners is a majority employee-owned investment firm dedicated to providing liquid alternative investment solutions to long-only and hedge fund investors.

Our derivative based strategies provide tools for investors to efficiently gain exposure, improve returns, reduce volatility, and provide liquidity when needed most.

Insights.

December Market Commentary

December 2023

  • Don’t get too worked up about zero-date options
  • What were the expectations for 2023?
  • How important is liquidity?
  • What are the expectations looking into 2024?

More than a decade ago, we set out to challenge conventional wisdom in asset management by improving outright and risk-adjusted performance, liquidity, and fees of both traditional and non-traditional asset classes. After 2023, we can add ‘reliability’ to the list of performance objectives/accomplishments.

In 2023, the VIX was largely unfazed by a US equity market dominated by big, disorderly gap moves to the upside and small orderly down moves. Despite these circumstances, our Protected Equity strategies performed well within expectations while maintaining protection. Our risk premia equity strategies (Ironbound) capitalized on the anemic volatility environment and elevated short-term interest rates...

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When Wall Street And Main Street Sync.

December 2023

  • Dovish pivot into a strong economy.
  • Consumers can continue to spend with higher real wages.
  • What does Dual Goldilocks mean?

The December FOMC meeting marked a key event in this interest rate cycle. The Fed started talking about rate cuts and stopped talking about rate hikes. We have seen many dovish pivots in the past but what makes this one unique is that they are pivoting into a strong economy. Despite one of the most aggressive hiking cycles in history, unemployment remains low (consistently below 4%), GDP is strong (2023 GDP growth is expected at 2.4%), and consumer spending is still strong. Inflation is falling and the Fed feels (rightly so, in our view) that they need to pre-empt a further surge in real rates. If inflation continues to fall, real rates will continue to move higher. Perhaps, too much in the Fed’s view. Announcing the pivot in December enabled them to get the messaging out of the way before we get too far into the election process...

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© 2024 Passaic Partners LLC is a Registered Investment Adviser based in Newark, New Jersey.