Macro Insights/Report: Macro tensions people are missing
Macro Insights/Report: Macro tensions people are missing
Interpreting data correctly
Let me start by saying that there are always people who feed you information and data. People post charts, news, or cool phrases all of the time. This doesn’t lead to success, in fact, it leads to a higher level of noise in your life and an inability to make correct decisions.
When I share this quote, it is based on the presupposition that you are INTERPRETING the information correctly:
In the information age, you simply need to be at the right place, at the right time, with the right information to succeed
Think about it, we all get the same markets, the same data releases, and the same assets to trade. Why do some people succeed and others fail? It is because it all comes down to your interpretation of the data placed before you!
The key is to get the right information, the right interpretation of that information, and correctly make trading implications. Let me just say, this is not a skill I acquired overnight. It comes from years and years of perfecting the craft. This is why I have focused the Substack on building a holistic foundation. No one else will do that because they have to focus on clickbait. I know if you are Subscribed to this Substack you have a different mindset. You actually want to learn in a durable way.
I am going to go through a couple of principles related to these ideas and connect them to tangible examples in the current market regime. I will then share the specific trades you would want to think about as implications.
Macro:
We continue to be in the Goldilocks macro regime. What is Goldilocks? Positive growth and decelerating inflation. Just look at the GDP print that came out today: growth is accelerating and coming in above expectations while inflation is decelerating and coming in below expectations.
The implication is that the fall in inflation is not AT THE EXPENSE of growth. This is key because it is the exact reason we have seen such a strong momentum impulse in equities:
I have been bullish on equities for a while and documented it in the macro reports and trades. I also did an article explaining the logic for WHY equities are likely to melt up even more:
The key thing you need to connect is HOW growth and inflation impulses connect to price action momentum impulses. One of the main funds that has done a lot of momentum research is AQR. Here are a couple of their papers:
What these papers show is HOW to quantify momentum impulses and their statistical significance. Where many people fall short is connecting these momentum impulses to the impulses in growth, inflation, and liquidity. This is where the alpha comes in because you can make more calculated decisions across every asset.
(I will be writing the next comprehensive macro report soon for paid subscribers. The way it sets a foundation for decisions isn’t going to be found anywhere else. See previous macro report here: link. There will be some other big releases soon for paid subscribers!).
Strategy and Trades:
Keep reading with a 7-day free trial
Subscribe to Capital Flows to keep reading this post and get 7 days of free access to the full post archives.