Market Outlook

Growth, Inflation & Policy As of January 3, 2023 INFLATION AND GDP Despite inflation starting to slowly tick lower over the last quarter, the probability of the U.S. heading into a recession in the next 12 months has become almost certain. Bloomberg’s recession probability model has correctly predicted a recession within 12-months every time the series…

Growth, Inflation & Policy As of November 1, 2022 INFLATION, GDP AND VALUATIONS Historically low inflation has led to strong asset returns and structurally higher equity multiples, but there may be a return to a more volatile macroeconomic regime. Even though inflation (as measured on a year-over-year basis) is expected to roll over, this does not…

Growth, Inflation & Policy INFLATION TRENDS Cleveland Fed inflation nowcast for July is currently at 8.9% Y/Y, not providing significant relief from June’s surprise upside surprise of 9.1%. Inflation needs to come in below 0.5% in July M/M in order to decelerate. For reference, for CPI to subside to 5% Y/Y, inflation needs to come…

Growth, Inflation & Policy SLOWING GDP GROWTH Growth is unquestionably decelerating, while inflation prints are seemingly perpetually overshooting. Coming into the year, we believed inflation would be the key driver of economic and capital-market returns. Putin’s invasion of Ukraine has only served to intensify this critical dynamic and has put the Federal Reserve in a…

Growth, Inflation & Policy SLOWING GDP GROWTH Growth is unquestionably decelerating, while inflation prints are becoming increasingly important. Should we see inflation accelerating from here, expect fireworks. If inflation however starts to decelerate, it could be a decent year for risk assets. While we are watching inflation as the primary driver of outcomes this year,…