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Macro Monitor

May 05 2023

Three Themes To Watch—An Update

  • May 5, 2023

The Value/Growth dynamic seemed to indicate a return to the “lower rates are good for Growth stocks” regime. China reopening is still alive and well, despite a recent pause. The GSCI Industrial Metals/Gold ratio has broken below its recent range, which bodes ill for inflation expectations going forward.

May 05 2023

Debt Ceiling—Risk Of An Accident Higher Than Normal

  • May 5, 2023

An earlier-than-expected X-date means higher market volatility and increased chance of a temporary short-term deal. Typically, the debt ceiling drama is short-lived and there’s not much impact on most assets before or after a resolution. Overall, the possibility of an accident is now above average.

May 05 2023

Risk Aversion Index: Stayed On “Higher-Risk” Signal

  • May 5, 2023

Despite the resilience in most risky assets, the recession probability has increased and the prospect of further credit tightening has only added to the downside risk.

Apr 06 2023

The MOVE Is Now A Better Risk Gauge

  • Apr 6, 2023

The MOVE index, a volatility gauge for the bond market, has become a far better risk barometer—and it surged to a new cycle high in March.

Apr 06 2023

Yield Curve Re-Steepening—At A Critical Crossroads

  • Apr 6, 2023

We studied market behavior around yield curve re-steepening and identified six historical cases. Of those, three were successful and preceded major recessions. The other three instances failed and reversed to new lows. The gist of the study: We are at a critical crossroads.

Apr 06 2023

Risk Aversion Index: Stayed On “Higher-Risk” Signal

  • Apr 6, 2023

Inflation concerns have been pushed aside by the upcoming curtailment of credit and lending. The possibility of a recession has no doubt increased, and risky assets are apt to face challenges.

Mar 07 2023

Three Themes To Watch

  • Mar 7, 2023

The China-reopening theme is alive and well, which will likely support cyclical outperformance. The disinflation trade is at a crossroads. Value/Growth started to decouple from interest rates.

Mar 07 2023

Weight Watcher Update—Still Like Value Sectors

  • Mar 7, 2023

While the valuation gap between Growth and Value sectors was compelling just a couple of years ago, it has closed drastically the last twelve months. Our analysis shows that Value sectors (Energy, Industrials) are still more favorable than Growth sectors (IT, Health Care).

Mar 07 2023

Risk Aversion Index: A New “Higher-Risk” Signal

  • Mar 7, 2023

Inflation worries have rekindled expectations for additional rate hikes. Providing this dynamic is still in play, risky assets are apt to face challenges.

Feb 06 2023

Soft Landing Or Recession? A Dashboard Update

  • Feb 6, 2023

The weight of evidence clearly leans more toward a recession, but the wild card is the recent dovish turn of global central banks, which can significantly boost confidence from investors, consumers, and businesses.

Feb 06 2023

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • Feb 6, 2023

Seasonality is still an advantage, and financial conditions have eased. Within fixed income, we remain favorable toward both Treasuries and higher-quality investment-grade corporate bonds. We maintain a neutral stance on the yield curve.

Jan 07 2023

2022 Surprises & 2023 Time Cycles

  • Jan 7, 2023

We updated our time-cycle composite for 2023. Overall, while the patterns suggest a year of smooth sailing for most markets, the actual paths forward could be much more volatile.

Jan 07 2023

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • Jan 7, 2023

While seasonality remains favorable, the risk of a severe recession looms large in the medium term. We are favorable toward high-quality corporate credit and Treasuries.

Dec 07 2022

Fed Funds Rate Above The CPI—Inflection Point Likely

  • Dec 7, 2022

Stock market bulls hope for an end to the tightening cycle in the not so distant future. However, the last two rounds didn’t end until the fed funds rate was raised above the prevailing rate of CPI.

Dec 07 2022

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • Dec 7, 2022

The market has responded quickly to global central-bank pivots, and favorable seasonality can carry the rally a bit further in the near term. However, the risk for a severe recession still looms in the medium term.

Nov 05 2022

Six Themes Around A Full Yield-Curve Inversion

  • Nov 5, 2022

The main yield curve drivers—fiscal and monetary policies—might be suggesting a steepening move is coming soon, while bank stock performance may also be hinting at a turn in the curve. However, a durable selloff in the U.S. dollar would be needed to support a steeper yield curve, so the tightening pain could last a while longer.

Nov 05 2022

Risk Aversion Index: A New “Lower-Risk” Signal

  • Nov 5, 2022

Given depressed market sentiment and favorable seasonality, near-term prospects look better for risky assets.

Oct 07 2022

The Great British Pivot

  • Oct 7, 2022

The latest BoE and RBA pivots fueled the market’s hope that global central-bank hawkishness has possibly peaked. We believe the market is likely to be lured by the prospect of a Fed pivot in the near term, only to be disappointed as that hope fades away.

Oct 07 2022

Recession Dashboard Update—More Deterioration

  • Oct 7, 2022

The latest ISM Manufacturing numbers resulted in a downgrade to that factor from “green” to “yellow.” Unemployment claims is the lone component with a green light on the dashboard. Overall, the various measures we track suggest the risk of a “real” recession is high—better than 50%.

Oct 07 2022

Midterm Elections—Not A Typical Year

  • Oct 7, 2022

While midterm elections are not typically big market movers, there is really nothing typical about 2022.