CONFIDENTIAL – RISK COMMITTEE MEETING MINUTES
CONFIDENTIAL – RISK COMMITTEE MEETING MINUTES
Date: October 5, 2025
Time: 08:00 EST
Subject: Quarterly Portfolio Review & Current Market Positioning
Attendees: Risk Management, Portfolio Strategy, Macro Research
OPENING REMARKS
The government remains shut down. The jobs report scheduled for Friday has been cancelled. Bitcoin closed Thursday above $119,000. Equity indices continue printing records. The Dow hit another all-time high on Friday despite zero visibility on employment data, inflation trends, or fiscal resolution timelines.
Let's be clear about what we're observing: these are not rational market conditions. These are momentum conditions.
BITCOIN & CRYPTO POSITIONING
Bitcoin has rallied approximately 6% since the shutdown began. Current trading range: $114K–$119K. Ethereum is consolidating around $4,139 after failing to hold gains earlier in the week.
Tether announced yesterday that their Wallet Development Kit is now open-source. This matters more than the headline suggests. We're talking about infrastructure for self-custodial wallets at scale—potentially trillions of them, according to CEO Paolo Ardoino. The Fed shuttered their crypto oversight program months ago. They've effectively ceded ground to private infrastructure builders while they focus on rate policy and traditional banking stability.
Here's the pattern: Bitcoin rallies when fiat uncertainty rises. The government shutdown delays economic data. Delayed data means delayed policy clarity. Delayed policy clarity means investors pile into scarce assets. BTC is benefiting from exactly what equities are benefiting from—an information vacuum that everyone's interpreting bullishly.
Strategy bought more BTC and ETH recently, per Fidelity accumulation data. We're not alone. But this rally has the texture of front-running rather than conviction. Everyone's buying because everyone else is buying, and the shutdown gives perfect cover to ignore fundamentals.
Recommendation: Hold current crypto allocation. Do not add. If BTC breaks $124K (April highs), reassess. If we see a correction back toward $100K–$110K, as some analysts expect from Fed policy reversals or prolonged shutdown, we buy.
EQUITY MARKETS & VALUATION CONCERNS
The S&P 500 and Dow both hit records this week. The Russell 2000 joined them on Thursday. Tech continues to outperform—AI hype remains the primary driver, not earnings. Palantir dropped 7.5% on battlefield system issues, but the broader indices barely registered it.
Tom Lee put out a 7,000 target for the S&P 500 by December. That's a 4.5% gain from here in two months. His rationale? Government shutdowns historically don't matter. Average S&P 500 performance during shutdowns is +3.2%. Tech outperforms early. Financials and utilities outperform late.
Historical averages are comforting until they're not. We're at valuations that assume perfect execution, zero policy mistakes, and continued AI monetization that hasn't actually materialized yet. The risk-reward here is asymmetric—and not in our favor.
Services PMI data came in post-open Friday. Nothing alarming, nothing exciting. Markets didn't care either way.
Observation: The absence of the jobs report is being treated as bullish because bad news can't arrive if no news arrives. This is not a healthy setup. We're flying blind, and everyone's acting like that's an advantage.
Recommendation: Trim overweight positions in mega-cap tech. Rotate into value and defensive sectors. If we're wrong and the rally continues, we underperform by 100–200 basis points. If we're right and volatility returns, we preserve capital. Risk management over alpha chasing.
FIXED INCOME & RATE OUTLOOK
The 10-year sits in the low-to-mid 4% range. It spiked to 3.86% during the April crash before settling. Current levels are unattractive relative to equity momentum, which is why everyone's still in stocks. But that won't last.
The Fed is expected to cut rates three more times this year—consensus ranges from 50 to 100 basis points total. The shutdown complicates this because they're flying blind too. No jobs data. No inflation updates. How do you calibrate monetary policy when the data infrastructure is offline?
Answer: you don't. You wait. And waiting means the risk-on trade extends longer than it should.
Gold hit new all-time highs recently. That's not a coincidence. When both equities and gold are rallying simultaneously, you're watching a flight to anything-but-cash. That's liquidity sloshing around, not smart money positioning.
Recommendation: Increase duration exposure modestly. If the shutdown drags and growth data darkens when it finally arrives, yields will drop. We're positioned for a soft landing that may end up being a hard stop.
SYSTEMIC RISK ASSESSMENT
Here's what keeps me up at night: the government shutdown is a symptom, not the disease. Congress couldn't pass a funding bill because fiscal coordination has broken down entirely. The Fed is cutting rates while equity markets are at all-time highs. Crypto infrastructure is being built in the private sector faster than regulators can comprehend it, let alone control it. And everyone—retail, institutions, hedge funds—is positioned the same way: long risk, short dollars, long momentum.
When everyone's on the same side of the boat, someone's going overboard when it tips.
Bitcoin above $119K during a government shutdown sounds bullish until you realize it's pricing in systemic fragility. The S&P 500 printing records while economic data goes dark sounds resilient until you remember that price discovery requires information, and we currently have none.
October has seasonal tailwinds. Fine. Fidelity is accumulating. Fine. Historical shutdown performance is positive. Fine.
But we're also at a point where a single miss—one disappointing earnings report from a mega-cap, one ugly data print when the government reopens, one Fed comment that sounds less dovish than expected—could unwind weeks of gains in hours.
CLOSING SUMMARY
Current positioning: overweight equities, underweight bonds, neutral crypto.
Recommended adjustments: reduce equity exposure by 500 basis points, rotate into defensive sectors and value, increase duration modestly, hold crypto allocation but prepare to buy dips below $110K BTC.
Rationale: risk-reward is skewed. We're pricing perfection in an environment defined by uncertainty. When the music stops, we'd prefer to be near the exit.
Next meeting: Monday, October 13th, or sooner if material developments warrant.
End of minutes.