The Macro View: A More Selective Market Emerges

By David Miller, Co-Founder and Chief Investment Officer, Catalyst Capital Advisors LLC and Rational Advisors, Inc.

Macro Outlook

The market is entering a period where macro, not momentum, is, in our opinion, likely to drive returns. A big issue is that investors are now trying to handicap whether the Middle East shock, even after the recent ceasefire, becomes a short-lived geopolitical spike or a more durable inflationary event. If oil continues to retreat and the conflict truly does de-escalate, equities have room to recover because the first quarter already reflected a meaningful repricing of geopolitical and inflation risk.

However, if energy remains elevated, Q2 becomes much more challenging because higher fuel costs start to pressure margins, consumer spending, and the Fed’s flexibility all at once. Recent reporting and Fed-related data suggest exactly that tension: markets are hoping for de-escalation, while inflation nowcasts are already showing war-related pressure on headline prices.

A Selective Market Could Mean a Rising Tide Does Not Lift All Boats

My base case is that Q2 could be a more selective market than investors got used to in prior rallies. This is probably not the kind of backdrop where everything rises together. If rates stay higher for longer and inflation stays sticky, leadership should favor businesses with pricing power, durable free cash flow, and balance-sheet strength, while more rate-sensitive and lower-quality parts of the market remain vulnerable.

In other words, investors may still want exposure, but they are likely to become much less forgiving about valuation and much more focused on earnings durability. That matters because the Fed does not appear eager to change course quickly, even as markets debate whether the next move is a cut, a long pause, or in more extreme scenarios even a hike if inflation worsens.

Can the Consumer Economy Absorb a Shock?

The consumer will be one of the key swing factors this quarter. So far, the economy has held up better than many expected, with February retail sales coming in solidly, but there is a real question about how long that resilience lasts if gasoline prices stay elevated and broader cost pressures continue feeding through the system.

That is why I think Q2 is less about broad optimism and more about whether the U.S. economy can absorb an external shock without rolling over. If the consumer remains intact, the market can stabilize. If not, investors will start worrying more seriously about margin compression and slower growth into the back half of the year.

Bottom Line: Volatility Ahead

Expect volatility, expect narrower leadership, and expect markets to stay highly headline-sensitive. A benign outcome is still possible, especially if oil keeps falling and inflation pressure proves temporary.

But this is not a clean “risk-on” environment yet. It is a market that wants to rally, but still needs confirmation from energy prices, inflation data, and the Fed before investors can feel confident.

Mr. Miller is a portfolio manager for the Catalyst Systematic Alpha Fund (ATRFX), Catalyst Insider Buying Fund (INSIX), Catalyst Insider Income Fund (IIXIX), Rational Strategic Allocation Fund (RHSIX) and the Strategy Shares Gold Enhanced Yield ETF (GOLY).

Macro and Structural Pressures Likely to Sustain Elevated Volatility

By Roy Niederhoffer, Founder & President, R. G. Niederhoffer Capital Management

Equity Outlook

While the Iran war spiked volatility in March, there are other factors ruminating that seem likely to keep markets volatile well into Q2 and beyond.

Although a recent ceasefire may begin to ease some of the pressure, the Strait of Hormuz remains effectively closed, with roughly 800 tankers stranded and Iran permitting only selective passage. Even with the ceasefire, re-opening commercial shipping will take months. Brent is above $110 and WTI near $99, gas has moved from $2.93 to $3.88 in a single month, and disrupted shipping is adding costs across the supply chain. The strain on a consumer already stretched by years of cumulative inflation is likely to intensify.

The Fed has shifted to a hawkish lean, and with consumer price pressure and a 10% global tariff, easing is unlikely, particularly with nearly $40T of debt to service. Oil has already spiked, however, and this is not a situation where we might expect prices to rise indefinitely.

What makes the current dislocation particularly interesting is the speed of narrative rotation. Within a single month, the dominant market story shifted from AI monetization concerns to geopolitical supply shock to stagflation risk to tentative peace optimism. Each rotation forces a repricing. Each repricing triggers the same cognitive reflexes: recency bias drives momentum chasers into the trade just as it reverses; loss aversion forces liquidation at precisely the wrong moment; anchoring to pre-crisis levels creates a false sense of how far markets can move.

The Stressed Private Credit Market

Private credit remains under stress, with the Cliffwater BDC Index down -19% since July and 25 to 40% of private credit concentrated in software, the sector most threatened by AI disruption. At conferences, private credit managers are touting dispersion of returns: “It’s not us, it’s those other bad managers.” When an industry competes on relative survival rather than absolute merit, it has a problem.

The stock-bond correlation has remained positive since 2021, meaning fixed income allocations add equity beta rather than reduce it. The S&P beta of a 60/40 portfolio has climbed to +0.71 since 2020, from +0.50 over the prior two decades. And underneath the major indices, single-stock realized volatility versus the index is at a record, as the market prices in the AI transformation per company.

And yet the right tail must also be considered. The U.S. runs deficits of 6% of GDP, and with $40 trillion in debt, asset prices could rise merely because their denominator loses value. The midterms and the government’s inability to tolerate austerity suggest the new Fed Chair may take a more accommodative stance, creating an upside surprise for stocks.

At Niederhoffer, our overlay strategy is designed to provide upside enhancement as well as downside risk mitigation. Since inflation returned post-Covid, the S&P has been up in 5 of 6 years at double its average return, and this may be the norm as the dollar debases.

Bottom Line

We believe that factors driving increased two-sided volatility are likely to persist well beyond the current quarter.

Dual Shocks Drive a Shift in Credit Sentiment

By Natalia Lojevsky & Stan Sokolowski, CIFC Asset Management

The first quarter closed on a decidedly more cautious note than it began. Two successive shocks reshaped investor psychology across credit markets: first, the rapid repricing of the Technology and Software complex as concerns about AI-driven disintermediation spread from sector to sector with unusual speed, and second, the outbreak of armed conflict in the Middle East, which sent oil prices sharply higher and closed the Strait of Hormuz to commercial shipping.

The geopolitical dimension, still very much unresolved as we enter the second quarter, has materially altered the inflation and rate-path calculus for investors. What had been a relatively constructive backdrop for credit entering 2026 gave way to a more complex one, as rising energy costs reignited inflation expectations and all but eliminated the near-term prospect of further Fed easing. Investor confidence was further tested by a wave of elevated redemption requests from semi-liquid private credit vehicles.

Against this backdrop, the senior secured corporate loan market posted its weakest first-quarter performance since 2020, though the stress was concentrated rather than systemic. Double-B loans held positive returns even in February’s most acute period of dislocation, while several defensive sectors demonstrated genuine resilience throughout and the asset class notably outperformed both equities and traditional fixed income in March.

Duration, Inflation, and Geopolitical Risk in Focus

Entering the second quarter, the key open questions facing credit investors are not primarily about credit quality but about duration and resolution. The Strait of Hormuz closure is the most immediate macro wildcard, with oil supply constraints keeping inflation expectations elevated and the likelihood of near-term rate cuts diminished considerably. Even after the ceasefire announcement, it will take some time for normalcy to return.

Technology Credit: Differentiation Likely to Replace Indiscriminate Selling

The coming weeks will also bring the first full earnings season for Software and Technology borrowers since the AI disruption narrative took hold, providing hard revenue data against which to measure fears that have, in our view, run materially ahead of underlying fundamentals.

The broad-based selloff in software loans penalized mission-critical, deeply embedded platforms alongside genuinely vulnerable point solutions — a distinction the market’s indiscriminate selling largely ignored. We are closely monitoring credits with near-term refinancing exposure and elevated AI-substitution risk and have selectively reduced positions where business model vulnerability and maturity pressure create a compounding risk profile.

At the same time, we continue to find compelling opportunities in software sub-sectors where deep domain knowledge, workflow integration, and customer relationships built over decades create durable barriers to displacement, particularly in cybersecurity, core systems of record, and vertical platforms serving risk-averse enterprise end markets.

Bottom Line: Discipline, Dispersion, and the Primacy of Carry

The macro backdrop is noisy, the list of risks is always long, and anxiety remains high, but fundamentals are broadly sound, default risk is manageable, and starting yields have potential to do a lot of work for investors willing to underwrite credit risk thoughtfully.

In a world where equity indices are concentrated in a handful of megacap names and valuations are rich, investors have a chance to rotate into credit strategies that offer the prospect of long-run equity-like returns for senior secured risk, effectively mitigating risk in the portfolio while keeping return targets intact.

Credit may not dominate the headlines the way AI or tariffs do — but in an environment like this, it remains a compelling opportunity to compound capital.

Q2 Spotlight: Energy Infrastructure

By Simon Lack, Founder, SL Advisors

Looking Back

The first quarter of 2026 has been characterized by a powerful rotation back into energy infrastructure, driven by three key forces:

• Liquified Natural Gas (LNG) Expansion Momentum
• Fee-Based Cash Flows
• Recovery from 2025 Weakness

Internally, we are heavily tilted toward LNG-linked names such as Cheniere Energy, Venture Global and NextDecade, all of which benefited from rising global gas demand and continued export capacity expansion. Midstream operators like Energy Transfer and Targa Resources also rallied as investors sought yield and inflation-resistant income streams.

After a negative 2025 return of (−7.8%), the sector entered 2026 with lower valuations, enabling a sharp re-rating as sentiment improved.

Looking Ahead

As we look ahead, we believe several catalysts are likely to shape performance in the midstream energy sector. Continued geopolitical uncertainty and energy security concerns are supporting LNG demand, particularly in Europe and Asia. Qatar, formerly the world’s #3 LNG exporter, is now a less reliable supplier after having declared force majeure and closing their facility. This can benefit US LNG exporters.

Midstream companies remain focused on returning capital rather than overbuilding, supporting equity valuations. As interest-rate-sensitive assets, midstream equities could outperform if yields stabilize or decline.

Despite strong fundamentals, several risks could impact the sector. While midstream revenues are largely fee-based, prolonged declines in oil or gas consumption could reduce volumes flowing through pipelines. Companies in this sector are growing payouts and also buying back stock. Higher rates could compress valuations, although many pipeline companies have contracts that link price increases to PPI.

Bottom Line

Given the conditions, we favor the North American LNG and midstream growth story, combining high current income with capital appreciation potential. The sector’s strong Q1 performance reflects improving sentiment, LNG tailwinds, and capital discipline across the sector.

However, its concentrated structure and sensitivity to macro variables — particularly interest rates and global energy demand — mean that while upside remains compelling into Q2, there may be times of increased volatility.

IMPORTANT DISCLOSURES

Past performance is not a guarantee of future results.

INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF LIQUID ALTERNATIVE FUNDS, INCLUDING THE CATALYST FUNDS AND THE RATIONAL FUNDS. THIS AND OTHER IMPORTANT INFORMATION ABOUT A FUND IS CONTAINED IN THE PROSPECTUS, WHICH CAN BE OBTAINED BY CALLING 866-447-4228 OR AT WWW.CATALYSTMF.COM OR WWW.RATIONALMF.COM, AS APPLICABLE. THE RELEVANT PROSPECTUS SHOULD BE READ CAREFULLY BEFORE INVESTING. BOTH THE CATALYST FUNDS AND THE RATIONAL FUNDS ARE DISTRIBUTED BY NORTHERN LIGHTS DISTRIBUTORS, LLC (“NLD”). NLD HAS HAD NO ROLE IN THE STRUCTURING OR DISTRIBUTION OF ANY OTHER INVESTMENT PRODUCTS REFERENCED HEREIN, AND IS NOT RESPONSIBLE FOR THE MARKETING OR PROMOTIONAL MATERIAL RELATED TO THE OTHER INVESTMENT PRODUCTS PRODUCED OR SPONSORED BY ANY OTHER FIRM. DAVID MILLER, JOE TIGAY, DWAYNE MOYERS, MARTIN LUECK, IAIN CAMERON, STRATEGY SHARES, EQUITY ARMOR, SMH ADVISORS, AND ASPECT CAPITAL ARE NOT AFFILIATED WITH NLD AND ULTIMUS FUND SOLUTIONS.

Though the objectives, strategies and assets traded may differ significantly across liquid alternative approaches, investing in liquid alternatives generally carries certain risks. These risks may include, but are not necessarily limited to, the following: Certain funds may invest a percentage of their assets in derivatives, such as futures and options contracts. The use of such derivatives and the resulting high portfolio turn-over may expose such funds to additional risks that they would not be subject to if they invested directly in the securities and commodities underlying those derivatives. These funds may experience losses that exceed those experienced by funds that do not use futures contracts, options and hedging strategies. Investing in commodities markets may subject a fund to greater volatility than investments in traditional securities. Currency trading risks include market risk, credit risk and country risk. Foreign investing involves risks not typically associated with U.S. investments. Changes in interest rates and the liquidity of certain investments could affect a fund’s overall performance. Other risks include U.S. Government securities risks and investments in fixed income securities. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by a fund. Furthermore, the use of leverage can magnify the potential for gain or loss and amplify the effects of market volatility on a fund’s share price. All funds are subject to regulatory change and tax risks; changes to current rules could increase costs associated with an investment in a fund.

The value of a fund may decrease in response to the activities and financial prospects of an individual security or group of securities held in a fund’s portfolio. Investments in foreign securities could subject a Fund to greater risks, including currency fluctuation, economic conditions, and different governmental and accounting standards. A fund’s portfolio may be focused on a limited number of industries, asset classes, countries or issuers. Certain funds may invest in high yield or junk bonds, which present a greater risk than bonds of higher quality. Other risks may include credit risks and interest rate risk, particularly with respect to floating rate loan funds. Changes in short-term market interest rates will directly affect the yield on the shares of a fund whose investments are normally invested in floating rate debt. Floating rate loan funds tend to be illiquid, and a fund might be unable to sell the loan in a timely manner as the secondary market is generally a private, unregulated inter-dealer or inter-bank re-sale market.

The views expressed herein are as of April 8, 2026, and represent a general guide to the perspectives of the authors. The information and opinions contained in this document have been compiled or arrived at based on sources believed to be reliable and in good faith; however, no representations or warranties of any kind are intended or should be inferred with respect to the accuracy of the information contained herein or the economic return of an investment in a fund, and no assurance can be given that existing laws will not be changed or interpreted adversely. All such information and opinions are subject to change without notice. There is no assurance that these opinions or forecasts will come to pass, and past performance is no assurance of future results.

Quality ratings reflect the credit quality of the underlying securities in the Fund’s portfolio and not that of the Fund itself. Quality ratings are subject to change. Moody’s assigns a rating of AAA as the highest to C as the lowest credit quality rating.

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The Macro View: As U.S. Growth Slows, Is a Soft Landing in Sight?

By David Miller, Co-Founder and Chief Investment Officer, Catalyst Capital Advisors LLC and Rational Advisors, Inc.

The U.S. economy is gradually slowing from the strong post-pandemic expansion, with GDP growth expected to moderate in the fourth quarter as tighter financial conditions and the lagged impact of Federal Reserve policy filter through. Consumer spending has remained resilient but is beginning to cool, particularly in discretionary areas, as households continue to draw down excess savings accumulated during the pandemic.

Evaluating the Fed’s Next Steps

The Federal Reserve remains in a delicate balancing act. Inflation has eased substantially from its peak but is still running above the Fed’s 2% target, particularly in services and shelter costs. While markets are anticipating the possibility of at least one additional rate cut by year-end, the Fed continues to signal a “higher for longer” stance. Policymakers are increasingly focused on loosening, however, suggesting risks are shifting toward gradual easing if inflation continues to trend lower.

Headline CPI is expected to move lower into year-end, helped by base effects, softer goods pricing, and moderating wage growth. Still, sticky components such as shelter and services inflation remain persistent, keeping the Fed cautious. Meanwhile, the labor market, though strong, is showing early signs of cooling with slower payroll growth, rising jobless claims, and easing wage pressures. This more balanced labor environment lowers the risk of a near-term recession but reinforces the broader narrative of deceleration.

On the markets side, corporate earnings are showing signs of modest reacceleration after a shallow earnings recession earlier this year, with technology and communication services leading the rebound. Equity valuations, however, remain elevated relative to history, leaving stocks susceptible to bouts of volatility if growth disappoints. In fixed income, Treasury yields may
stabilize or drift lower as growth moderates and markets look ahead to eventual Fed cuts. Credit spreads remain tight, but higher-quality bonds appear increasingly attractive given late-cycle dynamics.

The Global Slowdown

Globally, Europe continues to struggle with sluggish manufacturing activity, while China’s growth remains underwhelming despite additional policy support. Geopolitical risks from energy shocks to conflicts abroad and the early stirrings of U.S. election season add further layers of uncertainty that could drive market swings.

The Big Picture

Overall, the economy appears to be moving toward a soft-landing scenario: slower but still positive growth, with inflation gradually trending lower. Risks remain two-sided – a sharper slowdown could force the Fed to ease more quickly, while sticky inflation could delay policy cuts.

Investors should prepare for continued volatility but also potential opportunities, particularly in quality equities and income-generating assets that can weather a late-cycle environment.

Mr. Miller is a portfolio manager for the Catalyst Systematic Alpha Fund (ATRFX), Catalyst Insider Buying Fund (INSIX), Catalyst Insider Income Fund (IIXIX), Rational Strategic Allocation Fund (RHSIX) and the Strategy Shares Gold Enhanced Yield ETF (GOLY).

Equity Outlook: Climbing the Wall of Worry

By Joe Tigay, Chief Trading Officer, Equity Armor Investments.

As we close the books on the third quarter of 2025, equity markets have once again defied skeptics with a robust performance that underscores the enduring power of technological innovation and accommodative monetary conditions. The quarter’s strength was anchored by the relentless momentum of Artificial Intelligence (AI) and mega-cap technology stocks, whose earnings trajectories continue to exceed even bullish expectations. Yet as we turn our attention to the final quarter of the year, investors must navigate an increasingly complex landscape where opportunity and uncertainty exist in delicate balance.

The third quarter’s rally was no accident. Beyond the AI narrative, which has captivated markets for nearly two years, lies a more fundamental driver: persistent liquidity. Despite official communications around quantitative tightening, the practical reality is that global central banks, led by the Federal Reserve, have maintained an accommodative stance that continues to channel capital into risk assets. This liquidity backdrop has proven decisive, steering flows away from traditional safe havens and cash equivalents toward equities that promise growth and innovation. The pattern is familiar and has repeated itself across recent quarters – when money remains abundant and inexpensive, markets climb.

Looking ahead to Q4, several critical questions demand attention. Foremost among them is the specter of inflation. While price pressures have moderated from their recent peaks, the underlying economic stability we’re experiencing could paradoxically reignite inflationary pressures through commodity price increases or wage acceleration. Our assessment suggests the Federal Reserve will maintain its current policy bias, prioritizing employment stability over preemptive rate hikes. This focus on the labor market component of the Fed’s dual mandate provides a constructive backdrop for continued equity appreciation, provided inflation metrics remain cooperative. Any meaningful re-acceleration in prices, however, would immediately challenge this benign scenario and force a rapid reassessment across asset classes.

Investors Should Beware of Potential Heightened Volatility

Our central thesis for the fourth quarter is that markets will continue their ascent while simultaneously experiencing heightened volatility, a phenomenon we describe as climbing the “wall of worry.” This expectation represents a notable departure from consensus thinking. Historically, rising equity prices and elevated volatility are inversely correlated; investors typically see low volatility during bull markets and vice versa. Yet current conditions suggest this relationship may break down. With the VIX trading near the lower end of its post-pandemic range despite elevated valuations, we believe the market is underpricing risk.

As stocks push higher into year-end, investors will inevitably demand greater compensation for holding risk, manifesting as sharper intraday swings and more frequent corrections even as the broader trend remains positive.

How We’re Positioned: High on Large Cap Tech and AI

This outlook informs our positioning strategy in our own portfolios. Rather than making binary directional bets, we’ve constructed a portfolio designed to perform across multiple market states, what we term being “covered both ways.” This approach allows us to participate fully in continued market advances while simultaneously benefiting from volatility spikes that would challenge more conventional long-only strategies. In an environment where complacency has been periodically punished, such flexibility is essential.
From a sector perspective, we remain constructive on Large-Cap Technology and the core AI infrastructure companies that have led this cycle. More compelling, however, is the broadening of AI adoption beyond hardware and chip manufacturers into the enablers and application layers across diverse industries. The next phase of this mega-trend will reward companies that successfully monetize AI capabilities rather than merely those building the foundational technology. Additionally, select opportunities within the Russell 2000 are emerging, representing smaller companies poised to become tomorrow’s growth engines.

The Verdict: Cautious Optimism in Equity Markets

As we navigate the final quarter of 2025, our stance is one of measured optimism grounded in fundamental drivers. The combination of persistent liquidity, technological leadership, and reasonable policy accommodation creates a supportive environment for equities over both the near-term and the next one to two years. However, success will require acknowledging and preparing for the increased volatility that inevitably accompanies markets at elevated valuations.
The wall of worry remains formidable, but history suggests it’s worth climbing.

Equity Armor sub-advises the Rational Equity Armor Fund (HDCTX) and the Catalyst Nasdaq-100 Hedged Equity Fund (CLPFX).

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The Macro View: Volatility, Tariffs, and Fed Jitters

By David Miller, Co-Founder and Chief Investment Officer, Catalyst Capital Advisors LLC and Rational Advisors, Inc.

As we begin Q3 2025, the investing landscape continues to be shaped by three dominant macro forces: persistent trade tensions, evolving interest rate policy, and slowing global growth expectations.

Markets entered July still recovering from the tariff-driven dislocation that rattled Q2. While the worst fears of an all-out global trade war have not materialized, tariff escalation with China, Canada, and Mexico remains a live risk. Investors are weighing the paradoxical potential for a “tariff recession” to catalyze Fed rate cuts—an echo of what we saw in 2020. In fact, markets now price in two 25 bps cuts by year-end, even as inflationary impulses remain stickier than expected due to supply chain shocks and deficit spending.

Key Signals to Watch in Q3:

• Federal Reserve Policy: After holding steady in Q2, markets expect clearer dovish signaling at the upcoming August Jackson Hole symposium and the September FOMC meeting.
• GDP Trajectory: Q1 GDP showed a deceleration. It is an open-ended question as to the direction of the trajectory going forward, but the new bill will likely be a stimulus.
• Consumer Confidence: Still fragile after a sharp Q2 drop, this remains a key sentiment barometer.
• Yield Curve Dynamics: The 2s/10s curve remains relatively flat in slope.

Equity Markets: A Q2 Comeback, but Volatility Remains the Name of the Game

By Michael Dzialo, Karen Culver, Peter Swan, Zachary Fellows, John Dalton, and Nicolas Vilotti of the Managed Asset Portfolios Investment Team.

Investors would not know it from the slight gains in the broader market so far this year, but volatility has been the defining term for the first half of 2025. In fact, a recent Barron’s article mentioned that, on a risk-adjusted basis, returns for the S&P 500 this year have been in the 24^th percentile since 1990, while volatility has been in the 89^th percentile. Now, more so than ever, the broader markets react to headlines and tweets rather than facts and figures.

U.S. stocks fell in the first quarter after two consecutive years of gains amid rising policy uncertainty in Washington, marking the worst relative performance for U.S. stocks versus global markets in 23 years. Fast forward to the second quarter, and U.S. stocks rebounded following Liberation Day lows as global stocks treaded water. As we move into the third quarter, the same uncertainties that plagued the U.S. market in the first half of the year remain, including valuations, global macroeconomic activity, interest rates, and tariffs.

Despite the volatility this year, the S&P 500 is trading at 25.8 times trailing earnings, above the 5 and 10-year averages of 23.87 and 21.68, respectively. This compares to the MSCI ACWI ex-USA, trading at 15.92 times trailing earnings, slightly below the 5 and 10-year averages of 16.42 and 16.26, respectively. U.S. stocks have historically commanded premium valuations over most other countries for several reasons; however, we believe the delta between the two is too wide. Elevated valuations need the support of continued earnings growth. Companies reported decent earnings growth in the first quarter, yet many either pulled guidance for the rest of the year or issued softened guidance in the face of economic uncertainty.

Assessing the Health of the U.S. Economy

The U.S. economy has demonstrated remarkable resilience in 2025, but cracks are beginning to form. Our investment team is closely watching the labor market as layoffs rise, and recent college graduates are having difficulty finding a job. As such, we have a cautious view on the U.S. economy. At its most recent meeting, the Federal Reserve (the “Fed”) lowered its 2025 GDP forecast to 1.4% from 1.7% while raising its forecast for core inflation to 3.1% from 2.8% in anticipation of a tick up in inflation in the coming months stemming from tariffs. Eventually, we believe the Fed will succumb to political pressure and, as the economy slows, lower interest rates, further steepening the yield curve. Either way, Fed Chair Jerome Powell’s term ends in May 2026, and whoever President Trump selects to succeed him will likely share his views that the Fed needs to lower rates.

While U.S. investors grapple with uncertainty, markets outside the U.S. appear well-positioned over the long-term. We believe that U.S. trade policies should become catalysts to push foreign nations to spend more on infrastructure and defense. As we have witnessed in the U.S. over the past several decades, spending money is stimulative to the economy. We believe Europe may be in the preliminary stages of a substantial economic rebound as spending increases.

Why Investors Should Consider a Global, Active Approach

Overall, we believe an environment of heightened geopolitical and economic uncertainty strengthens the case for active management. While we monitor, we do not act on the seemingly daily barrage of tweets and headlines coming out of Washington. Rather, we look at the bigger picture. The investment team believes  the U.S. dollar will trend lower over the next few years, not necessarily in a straight line, benefiting global equities as well as select commodities. We are also overweight those sectors that historically do not rely on strong economic growth, including the Consumer Staples, Health Care, and Utilities sectors.

Managed Asset Portfolios sub-advises the Catalyst/MAP Global Equity Fund (CAXIX) and the Catalyst/MAP Global Balanced Fund (TRXIX).

Fixed Income Outlook: Bond Markets & Murphy’s Law

By Michael Perini, Perini Capital LLC.

Murphy’s Law stating “what can go wrong will go wrong” seems like an apt description of life for fixed income investors since the beginning of 2022. Since then, investors in the asset class have had to grapple with the following:

• Multi trillion dollar increases in the Federal Reserve’s balance sheet.
• Fiscal stimulus and budget deficits that are more in line with wartime or deep recessions.
• Inflation that has not been seen since the 1970’s.
• An increase in the Federal Funds rate from 0.25% to 5.50%.
• Tariffs and the uncertainty associated with them.
• Decreased demand for U.S. Treasuries.
• Renewed conflict in the Middle East.
• The “Big Beautiful Bill”

However, perhaps the problems are not what they seem when viewed through a different lens. Maybe what fixed income investors need is a paradigm shift. While all the above-mentioned headwinds make it seem like it may be time to reduce exposure to fixed income, we disagree because of our non-traditional way of viewing the risks associated with fixed income.

In our view, there are three distinct risks to fixed income investors:

• Interest Rate Risk: The risk that interest rates rise.
• Reinvestment Risk: The risk that interest rates fall.
• Credit Risk: The risk of permanent impairment of capital due to defaults.

The events beginning in 2022 and continuing through today have been extremely painful from the standpoint of investors with significant interest rate risk. Interest rates have gone up (a lot!) and prices have gone down. From the standpoint of reinvestment risk, the interest rate environment since 2022 has been a big positive, as the reinvestment rate of incoming cash flows is much higher than it was prior to 2022. The reinvestment component of total return is often underappreciated, both as a counterweight to interest rate risk and as a key in creating return stability to a variety of forward interest rate scenarios. However, achieving this balance is not easy, nor is it often accessible via traditional fixed income solutions.

Traditional fixed income solutions, such as U.S. Treasuries, corporate bonds and municipal bonds, pay interest every six months and principal as a final payment at maturity; therefore, due to the lack of cash flow between issuance and maturity, the reinvestment rate of incoming cash flows is typically not a meaningful component of total return. In contrast, structured credit sectors, such as mortgage-backed-securities, often pay interest and principal every month, and because of this feature the reinvestment of incoming cash flows is generally a meaningful component of total return. Additionally, the higher the cash flow of a portfolio the lower price changes (because of changing rates) matter as a percentage of total return.

Given the uncertainty in today’s macro environment where interest rate volatility and direction will likely remain high and difficult to forecast, we believe investors should look to alternative fixed income solutions that can provide non-correlated returns, diversification and balance interest rate risk versus reinvestment risk. The paradigm shift mentioned herein has the potential to benefit investors when navigating the fixed income markets through the rest of 2025 and beyond.

Perini Capital LLC is the sub-advisor to the Catalyst/Perini Strategic Income Fund (CSIOX)

Spotlight: Why Gold Continues to Shine

By David Miller, Co-Founder and Chief Investment Officer, Catalyst Capital Advisors LLC and Rational Advisors, Inc.

Gold remains a standout asset class as we enter Q3—offering both a potential hedge against geopolitical chaos and an escape from fiat currency erosion. A few key reasons:

1. Central Bank Demand Surging: BRICS nations—particularly China and India—are accelerating gold reserves accumulation as part of broader de-dollarization strategies.
2. Deficits + Tariffs = Inflation Risk: Persistent U.S. fiscal deficits, now exacerbated by tariff-induced price pressures, add to the long-term inflation argument—which is generally supportive of gold prices.
3. Yield Convergence: With bond yields declining and real rates pressured by inflation, the opportunity cost of holding gold is falling—reviving investor interest in gold ETFs and alternatives.
4. Technical Breakout: Gold has held above $3,250/oz for much of June and shows signs of an upward breakout as volatility returns to equity markets.

Positioning Implications:

We believe that the current macro environment justifies a meaningful allocation to gold and gold-related strategies.

Looking ahead, the combination of fragile equity sentiment, uncertain policy direction, and structural macro headwinds reinforces our view: gold isn’t just a crisis hedge—it’s becoming a core asset class in the modern portfolio playbook.

IMPORTANT DISCLOSURES

Past performance is not a guarantee of future results.

INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF LIQUID ALTERNATIVE FUNDS, INCLUDING THE CATALYST FUNDS AND THE RATIONAL FUNDS. THIS AND OTHER IMPORTANT INFORMATION ABOUT A FUND IS CONTAINED IN THE PROSPECTUS, WHICH CAN BE OBTAINED BY CALLING 866-447-4228 OR AT WWW.CATALYSTMF.COM OR WWW.RATIONALMF.COM, AS APPLICABLE. THE RELEVANT PROSPECTUS SHOULD BE READ CAREFULLY BEFORE INVESTING. BOTH THE CATALYST FUNDS AND THE RATIONAL FUNDS ARE DISTRIBUTED BY NORTHERN LIGHTS DISTRIBUTORS, LLC (“NLD”). NLD HAS HAD NO ROLE IN THE STRUCTURING OR DISTRIBUTION OF ANY OTHER INVESTMENT PRODUCTS REFERENCED HEREIN, AND IS NOT RESPONSIBLE FOR THE MARKETING OR PROMOTIONAL MATERIAL RELATED TO THE OTHER INVESTMENT PRODUCTS PRODUCED OR SPONSORED BY ANY OTHER FIRM. DAVID MILLER, STRATEGY SHARES, MICHAEL DZIALO, KAREN CULVER, PETER SWAN, ZACHARY FELLOWS, JOHN DALTON, NICOLAS VILOTTI, MANAGED ASSET PORTFOLIOS, MICHAEL PERINI, AND PERINI CAPITAL LLC ARE NOT AFFILIATED WITH NLD.

Risk Considerations

Though the objectives, strategies and assets traded may differ significantly across liquid alternative approaches, investing in liquid alternatives generally carries certain risks. These risks may include, but are not necessarily limited to, the following: Certain funds may invest a percentage of their assets in derivatives, such as futures and options contracts. The use of such derivatives and the resulting high portfolio turn-over may expose such funds to additional risks that they would not be subject to if they invested directly in the securities and commodities underlying those derivatives. These funds may experience losses that exceed those experienced by funds that do not use futures contracts, options and hedging strategies. Investing in commodities markets may subject a fund to greater volatility than investments in traditional securities. Currency trading risks include market risk, credit risk and country risk. Foreign investing involves risks not typically associated with U.S. investments. Changes in interest rates and the liquidity of certain investments could affect a fund’s overall performance. Other risks include U.S. Government securities risks and investments in fixed income securities. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by a fund. Furthermore, the use of leverage can magnify the potential for gain or loss and amplify the effects of market volatility on a fund’s share price. All funds are subject to regulatory change and tax risks; changes to current rules could increase costs associated with an investment in a fund.

The value of a fund may decrease in response to the activities and financial prospects of an individual security or group of securities held in a fund’s portfolio.  Investments in foreign securities could subject a Fund to greater risks, including currency fluctuation, economic conditions, and different governmental and accounting standards.  A fund’s portfolio may be focused on a limited number of industries, asset classes, countries or issuers.  Certain funds may invest in high yield or junk bonds, which present a greater risk than bonds of higher quality.  Other risks may include credit risks and interest rate risk, particularly with respect to floating rate loan funds.  Changes in short-term market interest rates will directly affect the yield on the shares of a fund whose investments are normally invested in floating rate debt.  Floating rate loan funds tend to be illiquid, and a fund might be unable to sell the loan in a timely manner as the secondary market is generally a private, unregulated inter-dealer or inter-bank re-sale market.

Any or all of the foregoing risk factors may affect the value of your investment.

The views expressed herein are as of June 30, 2025, and represent a general guide to the perspectives of the authors. The information and opinions contained in this document have been compiled or arrived at based on sources believed to be reliable and in good faith; however, no representations or warranties of any kind are intended or should be inferred with respect to the accuracy of the information contained herein or the economic return of an investment in a fund, and no assurance can be given that existing laws will not be changed or interpreted adversely. All such information and opinions are subject to change without notice.

Some of the statements in this presentation may contain or be based on forward looking statements, estimates, targets or prognoses (collectively, “forward looking statements”), which reflect the advisor’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the advisor and/or certain of its advisors, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by any fund or the investments of any fund, as the occurrence of these events and the results of a fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of a fund may differ substantially from those assumed in the forward looking statements. The opinions expressed reflect the advisor’s best judgment at the time this presentation was issued, and the advisorr and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as a result of new information or any future event or otherwise.

The advisor’s judgments about the growth, value or potential appreciation of an investment may prove to be incorrect or fail to have the intended results, which could adversely impact a Fund’s performance and cause it to underperform relative to other funds with similar investment goals or relative to its benchmark, or not to achieve its investment goal.

There is no assurance that these opinions or forecasts will come to pass, and past performance is no assurance of future results.

There is a risk that issuers and counterparties will not make payments on securities and other investments.

Glossary:

Bloomberg Commodity TR Index – designed to be a highly liquid and diversified benchmark for commodity investments.

Bloomberg US Aggregate Bond TR Index –  A market capitalization-weighted index that is designed to measure the performance of the U.S. investment grade bond market with maturities of more than one year.

BRICS –  an intergovernmental organization comprised of ten countries: Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.

Commodities – a basic good used in commerce that is interchangeable with other commodities of the same type. Investors and traders can buy and sell commodities directly in the spot (cash) market or via derivatives such as futures and options.

Credit Spreads – The difference in yield (return) between two debt instruments of the same maturity but with different credit ratings, reflecting the additional risk investors take on when lending to a borrower with a lower credit rating.

Currencies – money in the form of paper and coins that’s used as a medium of exchange. Currencies are created and distributed by individual countries around the world.

MSCI EAFE Gross TR USD Index – a broad market equity index that tracks the performance of large and mid-cap companies in 21 developed markets around the world, excluding the US and Canada.

S&P 500 TR Index – A market capitalization-weighted index that is used to represent the U.S. large-cap stock market.

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