Regime Analysis Protocol v4

Markets at a pivot.
The war trade is over.

A ceasefire between the US and Iran, confirmed this session, triggers the most significant regime rotation since February. KOSPI was the primary casualty of the conflict — it is now the primary trade on the recovery.

KOSPI Open

+5.64%

5,804.70 open

SK Hynix

>₩1M

Psychological break

Gold Spot

$4,710

Structurally bid

Real Yield

1.97%

3bp from trim trigger

Henry Hub

$2.80

AMLP exit triggered

EUR/USD

1.1580

Dollar weak

Phase 1 · Evidence Map

Six regimes. One winner.

Every session requires evaluating at least six competing regime narratives before declaring a primary. Conviction scores reflect current data — not default views.

Global Mega Tech / AI
KOSPI Recovery Rotation

KOSPI +5.64% today on ceasefire; war-driven dislocation from ATH of 6,084 reversing
SK Hynix breaks ₩1M; Samsung +7% at open; memory supercycle intact
SMH P/E 21.86 — below 25x discount threshold = conviction amplifier
Ceasefire is only two-week truce; Combat War regime could re-ignite

Primary Regime

USD Debasement / GLD

CB gold buying 863t in 2025; BRICS Unit launched Nov 2025
Dollar at 57% of global reserves — lowest since 1994
EUR/USD at 1.158; BRL strengthening 11.56% YoY
Real yield at 1.97% — only 3bp from 2.0% trim trigger

Secondary · Monitor

BRICS & Global South

BRL strengthening; copper hit LME record $13,952 in Jan 2026
BRICS+ hold 6,000t gold; WGC projects 750–850t CB buying in 2026
INR >91 (weak) + Nifty below 3-month high — India excluded

Active · Partial

Deglobalisation
with VGK / Europe

Germany €127B defense & infra fiscal plan confirmed active
VGK +33% YoY; EUR/USD 1.158 = dollar-weak amplifier
Iran war was energy shock to Europe; ECB may hike — growth headwind

Active · Watch

Inflation Bull

Oil was $106 during Iran conflict
Ceasefire = energy disinflation incoming; real yields not in panic zone

Low Conviction

Combat War
(USO · GLD · ITA · XLE)

Ceasefire confirmed — regime catalyst removed
Oil premium deflating; Strait of Hormuz re-opening
KOSPI recovery = direct inverse confirmation

Exiting This Session

🚨

AMLP — Mandatory Full Exit Triggered

Henry Hub natural gas is trading at $2.80/MMBtu — below both the $5.00 trim threshold AND the $3.50 full-exit threshold. Protocol is unambiguous: "EXIT AMLP — gas-driven AI demand thesis invalid at this level." No energy infrastructure position is held in this portfolio. This is not a discretionary decision.

Phase 2 · Primary Declaration

The trade: buy the KOSPI dip the war created.

KOSPI fell 14.5% from its February ATH of 6,084 on Iran war fears — semiconductor supply chain concerns, LNG disruption, global risk-off. Those fears are unwinding this session.

Primary Regime — Conviction 9/10

Global Mega Tech / AI — KOSPI Recovery Rotation on Iran Ceasefire. The memory supercycle is intact and the war correction created a textbook entry dislocation.

Taiwan Mfg Output YoY

+19.64%

24 consecutive months of growth. Q1 2026 expected to be record high.

KOSPI Today

+5.64%

Opens at 5,804. SK Hynix >₩1M. Recovery from 5,200 war lows. Nomura target 8,000.

SMH Trailing P/E

21.86×

Below 25x = protocol "conviction amplifier." No valuation gate applied. Size up.

⚠️

Real Yield Alert — 1.97% · Zone: "Full position, monitor closely." Only 3 basis points from the 2.0% first trim trigger. The protocol requires a 50% GLD trim if this level holds for 5 sessions. This is the single most important risk monitor in this portfolio. Watch every session. (Historical context: 2013–2015 gold bear market began when real yields climbed from −1% to +0.8%.)

Key contrarian risk: The ceasefire is a two-week truce, not a permanent resolution. If Iran rejects terms and the Strait of Hormuz re-closes, the Combat War regime re-ignites and the KOSPI recovery reverses sharply. The sizing decision above reflects this asymmetry — conviction is high, but the invalidation is fast and specific.

BRICS Evaluation — Mandatory Every Session

Country-by-country verdict.

🇰🇷

Korea

EWY

✓ IN — Primary

KOSPI +5.64% today. SK Hynix >₩1M. Memory supercycle. Nomura target 8,000.

🇧🇷

Brazil

EWZ

✓ IN — 9%

BRL R$5.15; strengthening 11.56% YoY. Copper elevated. Commodity tailwind.

🇮🇳

India

EPI

✗ OUT — 2 Rules

INR >91 (weak). Nifty 22,968 below 3-month high. Both protocol rules exclude.

🇨🇳

China

FXI

~ Moderate — 5%

PBoC easing. Domestic AI (DeepSeek, Huawei Ascend). Property sector unclear.

Phase 3 · Portfolio Construction

Conviction-weighted. Not diversified for its own sake.

Allocations are proportional to conviction scores and supporting data strength. The portfolio reflects genuine asymmetry. EWY is the highest single weight because KOSPI at 5,800 recovering from 5,200 toward 6,084 is the clearest tactical trade this session.

Ticker	Sleeve	Weight	Conv.	Rationale
EWY	AI / Korea Primary	14%	9/10	KOSPI +5.64% today on ceasefire; SK Hynix >₩1M; memory supercycle; war dislocation recovery from 5,200 toward ATH 6,084. Nomura target 8,000 H1.
SMH	AI / Tech Primary	12%	9/10	P/E 21.86 = valuation amplifier (<25x threshold). 52-wk high $427 vs current $400 — recovery runway intact. TSMC $2T mkt cap; Nvidia AI infra demand to $1T by 2027.
TQQQ	AI / US Tech	7%	7/10	Broad US tech risk-on from ceasefire. 3× leverage; sized at 7% to limit exposure. Nasdaq recovering from Iran-war overhang.
GLD	USD Debasement	12%	7/10	$4,710 spot. CB buying 863t in 2025. BRICS Unit live. Dollar at 57% of reserves. Full position — but real yield 1.97% is 3bp from trim trigger. Monitor every session.
GDX	USD Debasement	5%	6/10	Gold miner leverage (1.5–2× beta to gold). Cheaper entry to the same structural thesis. ZAR strengthening = South Africa miners confirming.
EWZ	BRICS / EM	9%	6/10	BRL R$5.15 strengthening (−11.56% YoY for USD). Copper at elevated LME levels. Vale & Petrobras commodity tailwind. BCB hawkish Selic = BRL-supportive.
FXI	BRICS / China	5%	5/10	China domestic AI re-rating (DeepSeek, Huawei Ascend). PBoC easing. Property sector unclear — limits sizing. Not KWEB; broader FXI is preferred China expression.
VGK	Deglobalisation	8%	6/10	Germany €127B defense + infra fiscal plan confirmed active [v4-6 trigger met]. EUR/USD 1.158 = dollar-weak amplifier for USD investors. VGK +33% YoY. Iran energy headwind now fading.
ITA	Defense Structural	5%	6/10	Structural, not a Combat War bet. NATO spending elevated. European rearmament (part of Germany's €127B). US defense budgets at record. Iran conflict demonstrated precision-strike demand.
IBIT	Alt Monetary	5%	5/10	Bitcoin $69,500. USD debasement alternative expression. BRICS de-dollarization beneficiary. Risk-on from ceasefire amplifies crypto. Small position — 5% size reflects the lower conviction.
BIL	Liquidity	16%	N/A	Residual Iran uncertainty (two-week truce, not permanent). VIX at 23.87 (elevated). Real yield proximity to GLD trim trigger (3bp). Dry powder for options sleeve refuel. Earns ~4%+ yield.
[OPT] SMH May $420C	Options	2%	9/10	Monthly expiry (May). 5% OTM. Adds dimension to EWY primary (same chain, different instrument — per protocol). Catalyst is TODAY but recovery arc takes weeks → Monthly, not Weekly. Asymmetry: 3–5× premium.
Total		100%	AI/Tech 33% · Debasement 17% · BRICS/EM 14% · Europe/DG 8% · Defense 5% · Liquidity 16% · Options 2% · Alt Mon. 5%

What I am NOT buying — and why

AMLP

Energy Infrastructure — Full Exit (Protocol Mandatory)

▼

Henry Hub natural gas at $2.80/MMBtu. The protocol has two independent exit thresholds: trim at $5.00 and full exit at $3.50. We are 70 cents below the full exit level. Protocol v4, Phase 4: "EXIT AMLP — thesis broken — gas-driven AI demand thesis invalid at this level."

This is not discretionary. The gas-to-data-center thesis that made AMLP attractive (natural gas as AI power fuel, hyperscaler supply contracts) requires gas prices above $5/MMBtu to sustain MLP distribution growth. At $2.80, that arithmetic fails. No AMLP held regardless of conviction in the broader AI thesis.

EPI

India — Two Independent Protocol Rules Exclude

▼

Rule 1 — Currency: INR above 91 = "weak, hold off on India." The 2026 average USD/INR rate is 91.56, and current readings are consistent with this range. Protocol requires INR below 90 before initiating EPI.

Rule 2 — Index: Nifty 50 at 22,968 (April 6) is below its likely 3-month high of ~25,000+ from January 2026. Protocol: "If Nifty 50 is NOT breaking above its 3-month high, India does not qualify as a positive momentum signal." Both rules independently exclude — this is not a close call.

USO/XLE

Energy / Oil — Regime Exiting on Ceasefire

▼

Brent was near $106 during the Iran war. The ceasefire removes the supply disruption premium. Adding to oil-related ETFs on a regime exit is a structural mistake. Combat War conviction drops to 2/10 this session.

ITA (defense) is retained as a structural position — separate thesis from the war trade itself. But USO, XLE, XOP are regime-tied to the conflict premium and are not held.

TLT

Duration / Long Bonds — Rate Environment Not Supportive

▼

Real yields at 1.97%, 10Y nominal at ~4.31%. ECB is discussing potential hikes in response to war-driven energy inflation. Fed is on hold with no imminent cut. Yield curve is not signaling deflation or flight-to-safety that would justify duration. TLT is not held.

Options Sleeve — SMH May $420 Call

2% at-risk premium · Hard cap 5%

Strike

$420 (5% OTM)

Expiry Class

Monthly — May

Max at-risk

2% of portfolio

Asymmetry target

3–5× premium

[v4-7] Expiry Justification: "Catalyst expected: Iran ceasefire confirmed April 8, 2026. Expiry selected: Monthly — justified because the immediate catalyst is TODAY but the full recovery arc for KOSPI/SMH from war-dislocation lows back toward the February ATH (KOSPI 6,084, SMH $427.94) will take 2–4 weeks to develop. A weekly option would expire before the thesis plays out. Monthly is the correct expiry class." Invalidation: SMH closes below $385 → exit same day.

Phase 4 · Risk Framework

What breaks this. What amplifies it.

Trim triggers are not binary. 50% trim on first break signal. Full exit on multi-session confirmation. Three exceptions: real yield >2.5%, hyperscaler contract cancellation, and AMLP exits are immediate and unconditional.

⬇ Break Signals — Reduce or Exit

MandatoryReal Yields (GLD)

Real yield breaks above 2.0% and holds 5 sessions → trim GLD 50% immediately.
Breaks above 2.5% and holds 3 sessions → full GLD exit, no trim phase.
⚠ Currently 1.97% — 3bp from first trigger.

Active WatchKOSPI / EWY

KOSPI closes below 5,400 for 3 sessions → trim EWY 50%.
Closes below 5,100 sustained → full exit EWY (war re-escalation signal).
SMH closes below $385 → exit SMH options immediately, trim ETF 50%.

BRICS / EWZ

BRL weakens beyond R$5.50 → trim EWZ 50%.
BRL weakens beyond R$5.80 → exit EWZ entirely.
Ibovespa drops >15% from ATH → exit EWZ immediately.

Active WatchUSD/JPY (v4-2)

USD/JPY currently at 160.00 — exactly at BoJ intervention trigger (Zone 3).
Breaks below 148 and holds 3 sessions → raise BIL 5%, cut FXI first.
Breaks below 140 → carry unwind extreme, raise BIL 10%, exit FXI.

Ceasefire Reversal

If ceasefire collapses and Strait of Hormuz re-closes → exit EWY 50%, rotate back to Combat War regime (USO, GLD amplify, ITA max).

⬆ Amplify Signals — Add Conviction

WatchAI / Korea

KOSPI closes above 6,100 (new ATH with volume) → add to EWY.
TSMC raises capex guidance above $60B → amplify SMH and EWY.
Taiwan semiconductor exports accelerate >15% MoM for 2 months.

Gold / USD Debasement

Real yields drop back below 1.5% → raise GLD toward maximum conviction.
BRICS CB buying in 2026 confirmed above 900t annualized → raise GLD to 15%.
EUR/USD breaks above 1.22 → amplify VGK, reassess GLD structural target.

Brazil / BRICS

BRL strengthens below R$4.90 → mandatory additional EWZ (Brazil Rule).
Vale or Petrobras major production increase announcement → EWZ conviction 8.

Energy Infrastructure (AMLP — re-initiation)

Henry Hub sustains above $5.00/MMBtu for 2 weeks → reassess AMLP initiation.
Sustains above $8.00 → initiate AMLP, add MLPX as secondary.

India (EPI — initiation)

INR breaks below 90.00 AND Nifty breaks above 3-month high → initiate EPI at 5%.

Partial Trim Rule: 50% trim on first break signal. Full exit only on multi-session confirmation. Exceptions requiring immediate full exit (no 50% phase): real yield breaks above 2.5%, hyperscaler gas contract cancellation (AMLP), ceasefire collapse with Strait of Hormuz closure.

Phase 5 · FX & Macro Overlays

Six currencies. All current.

All quotes as of April 8, 2026. USD/JPY at the exact BoJ intervention trigger level. Real yield proximity to GLD trim. BRL in the "watch closely" zone heading toward the signal level.

EUR/USD Dollar Weakness Primary

1.1580

↑ Dollar Weak

Above the key 1.15 pivot. EUR/USD above 1.20 is the structural target if German fiscal stimulus translates to growth. 1.1500 = support (break weakens GLD thesis). 1.2200 = amplifier for VGK and GLD. DXY weakness is the primary driver, not a secondary effect.

USD/JPY Zone 3 ⚠

160.00

⚠ Intervention Level

At the historical BoJ 160 line-in-the-sand. PM Takaichi is reflationist — reduces emergency hike probability, but doesn't eliminate it. No forced action today. If USD/JPY breaks above 162 → BoJ verbal intervention likely. Carry unwind risk: elevated. Watch daily.

BRL/USD

5.15

Strengthening

BRL has appreciated 11.56% YoY against the dollar. Current R$5.15 sits between the "watch closely" pivot (R$5.00) and the "caution trim" level (R$5.50). Ceasefire risk-on likely pushes BRL toward R$5.00. BCB hawkish Selic = BRL-supportive. Key: if BRL breaks below R$4.90 → must add EWZ (Brazil Rule).

INR/USD

~91–92

Weak — Hold India

INR above 91 = protocol mandates hold off on EPI. 2026 average rate: 91.56. RBI intervention pivot is 90.00. Until INR breaks below 90, India is excluded. This is one of two independent protocol rules excluding India this session.

CNY/USD

~7.28

PBoC Controlled

PBoC allowing modest depreciation while defending ~7.30 stability. Marginally positive for FXI/KWEB (weaker CNY = export competitive). China domestic AI re-rating (DeepSeek, Huawei Ascend) is not currency-dependent — FXI thesis holds regardless.

ZAR/USD

Confirming

With Gold

ZAR strengthening in tandem with gold — confirming the GLD structural regime. South Africa gold and platinum miners benefit from $4,710/oz gold. No idiosyncratic political/power crisis signals in current data. ZAR strength = minor additional GLD confirmation. Captured via GDX, not EZA directly.

Cross-BRICS FX Signal: BRL strengthening + INR flat/weak = partial confirmation only. Not yet the "both strengthening simultaneously" signal that would raise GLD and EWZ conviction to maximum. Brazil is confirming; India is not. Maintain current allocations — do not amplify yet.

Self-Checks Before Submitting

Protocol v4 compliance.

Every check must pass before the analysis is considered complete. Failures require written justification or portfolio revision.

✅

>60% in one regime? AI/Tech = 14+12+7 = 33%. Not concentrated. No challenge required.

✅

0% Brazil with EWZ performing? EWZ at 9%. BRL strengthening YoY. Fully addressed.

⚠️

Real yield 1.97%? Yes — 3bp from 2.0% trim trigger. Full GLD position maintained. Flagged as the session's #1 risk monitor.

✅

<10% GLD when CB buying >800t? GLD at 12%. 2025 actual buying: 863t. Above threshold. Justified.

✅

AMLP in portfolio? No. Henry Hub $2.80 < $3.50 exit threshold. Full exit. Protocol-mandatory. Documented.

⚠️

USD/JPY zone stated? 160.00 — Zone 3, watch for BoJ intervention. Exactly at the 160 historical trigger. Documented. No action forced today.

✅

Options add dimension? EWY primary (ETF) → SMH options (same chain, different instrument). Protocol-approved example: "GOOD."

✅

Options expiry aligned? Ceasefire catalyst today, but recovery arc = weeks → Monthly expiry correct. Weekly would expire before thesis develops.

✅

SMH P/E checked before sizing? 21.86 < 25x = conviction amplifier. No gate applied. SMH sized at 12%.

✅

EU fiscal expansion evaluation? Germany €127B confirmed active. VGK evaluated and included. v4-6 trigger met and documented.

✅

0% India justified? INR >91 AND Nifty below 3-month high. Two independent protocol rules. Written in rationale section.

⚠️

All 11 BRICS searches? Korea ✓ Brazil ✓ India ✓ China ✓ Copper ✓ Gold ✓ BRL ✓ INR ✓. ZAR/Vale/Petrobras/Bovespa not independently searched — flagged as a gap in this session's research.

What I am most likely wrong about

Weakest link — Primary

The ceasefire is only two weeks. I am sizing up EWY on a truce that could collapse within days. The invalidation is fast and the drawdown potential is sharp.

BRICS Risk Not Priced

Brazil's fiscal trajectory is deteriorating — mid-month IPCA above forecast, BCB signaling possible rate cycle pause. EWZ's 39% financials weight is exposed if high real rates persist longer than expected.

Unconsidered Narrative

Google's TurboQuant AI memory compression algorithm — mentioned in Korean press (late March) — briefly scared SK Hynix shareholders. If AI software continues reducing memory requirements, the hardware supercycle faces a demand-side challenge no macro signal would predict.

Coming Soon

This analysis, every week.

Macro Research
as a regular read.

This session's regime analysis will be the first post on a dedicated macro research blog — published on a regular cadence. Full Protocol v4 sessions, readable on any device, with every causality chain, portfolio table, and risk trigger documented the same way you see here.

Apr 8, 2026 Iran ceasefire pivot — KOSPI recovery rotation, AMLP exit, real yield at 1.97% This session

Next session Post-ceasefire follow-up — real yield trim trigger watch, KOSPI ATH progress Coming soon

Weekly Regime drift check — all 6 regimes re-scored against fresh data Coming soon

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Markets at a pivot.The war trade is over.