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Macro Monitor

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.

Oct 07 2022

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

  • Oct 7, 2022

The market seems very eager to price in peak central-bank hawkishness; but only time will tell if the BoE pivot marks the beginning of a global pivot cycle. Caution is still recommended.

Sep 08 2022

Inflation Reduction Act—Corporate Tax Hike Implications

  • Sep 8, 2022

We take a look at the impact of past corporate-only tax hikes versus tax hikes of any type (personal income, corporate, capital gains). The gist is, there isn’t much difference at all.

Sep 08 2022

Fed-Pivot Watch—Pivot Pushed Further Out

  • Sep 8, 2022

Since our July report, market action felt like the pivot had already occurred. However, according to our latest update, numerous measures have moved away from levels that would support a pivot. In other words, the eagerly-awaited Fed pivot has been pushed further out.

Sep 08 2022

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

  • Sep 8, 2022

The risk of a policy error is the top concern as the Fed doubles the pace of Quantitative Tightening, even with the U.S. technically in a recession. Caution is recommended.

Aug 05 2022

Yield Curve Inversion—Count Down To A Bull Steepener

  • Aug 5, 2022

Now that the yield curve has inverted, its dynamic is apt to change from bear flattening (higher rates, flatter curves) to bull steepening (lower rates, steeper curves) fairly soon.

Aug 05 2022

Recession Dashboard Update—Real Recession More Likely Than Not

  • Aug 5, 2022

Our recession indicators have continued to deteriorate. Given the stagflation backdrop, the Fed’s tightening cycle is very likely to end in a recession.