Macro Regime Tracker: Powell’s Mistake
Macro regime and risk assets qualified clearly
The Macro Regime Tracker offers a daily lens on how shifts in growth, inflation, and liquidity affect short-term risk and reward. Leveraging machine learning, AI, and cross-asset data, it identifies macro changes and their impact on market positioning.
Macro Regime Tracker Index:
Macro Regime Context
Macro Tear Sheets: Equities, Fixed Income, FX, Crypto, and Commodities
Macro Regime Dashboard: Excel spreadsheet for economic data and interest rates
Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker
AI and Machine Learning Strategies - Macro Regime and Positioning Premiums Strategies: S&P 500, 2-Year Interest Rates, Gold, and Bitcoin
Macro Regime Context:
I laid out the macro views for WHERE we are going here:
Powell’s testimony today continues to show that they are opting for inaction even though they know inflation will rise marginally. This inaction is allowing growth to run hot and further fueling upside in equities. The mistake in this is that when the Fed falls behind, they will eventually have to over correct to get back on course.
Main Developments In Macro
Federal Reserve – Policy, Inflation, and Guidance
Powell (Testimony Highlights):
"We do expect tariff inflation to show up more"
"Don’t think we need to rush to cut with economy strong"
"Majority feels it's appropriate to cut later this year"
"Lower inflation, weaker labor could mean earlier cut"
"Tariff pass-through may be less than expected — that matters"
"Strong economy means Fed can pause a bit"
"Story has been evolving, our thinking adapting"
"We don’t take political factors into consideration"
"Credibility on price stability very important"
"Don’t know how much cost will be passed to consumers"
Williams (NY Fed):
"Inflation is on track outside of tariffs"
"Market response to tariffs has calmed a bit"
"Expect GDP growth to slow to ~1%"
"Economy remains in a good place, current stance appropriate"
Barr:
"Expect inflation to rise due to tariffs"
"Second-round effects could make inflation persistent"
"Fed can afford to wait, policy well-positioned"
Hammack (Cleveland Fed):
"Inflation trend is encouraging, but progress very slow"
"Need more watching before rate cuts"
US Macro Data:
June Consumer Confidence: 93 vs. est. 99.8
Richmond Fed Business Index: –16
Richmond Fed Factory Index: –7 vs. est. –10
Geopolitics – Iran/Israel Conflict and US Stance
US Strike Impact:
CNN: "US strikes didn’t destroy nuclear sites"
NYT: "Set Iranian nuclear program back by a few months"
IDF: "Set back Iran’s nuclear and missile programs by years"
Netanyahu: “We eliminated nuclear and ballistic missile threats”
Trump told Netanyahu not to expect further US offensives
Iran Signals Diplomacy:
“We seek fair and reasonable agreement under intl law”
“Ready to resolve issues with US based on intl frameworks”
Israel Positioning:
Will respect ceasefire as long as Iran does
Lifting home front wartime restrictions
US Domestic Political Signals:
Senate vote on Trump tax bill planned Friday
Johnson: Targeting tax bill passage by July 4
Trump: “Get the big, beautiful bill to my desk ASAP”
Trade & Tariff Policy
Powell:
“Tariff inflation likely to appear in June/July numbers”
“Fed open to idea tariff pass-through will be less”
EU Warns:
Trump baseline tariff plan would still trigger retaliation
Williams:
Already seeing imported goods inflation from tariffs
Foreign producers not lowering prices
Bailey (BoE):
“Very unpredictable where Trump’s tariff war will end”
“High UK savings ratio should change at some point”
Macro Tear Sheets: Equities, Stock/Bond Correlation, Fixed Income, FX, Crypto, and Commodities
Macro Regime Dashboard: Excel spreadsheet for economic data, interest rates, and real estate.
Momentum and Mean Reversion Models: Equities, Commodities, Fixed Income and Currencies
You can find the educational primer and video explanation of these models here: LINK
Here is a summary of all models and their directional strengths:
Growth, Inflation, Fixed Income, Credit, and Equities Regime Tracker
The Macro Regime Model offers a real-time view of growth, inflation, and yield curve dynamics, integrating these with credit market shifts, equity risk premiums, and positioning data. It connects upcoming catalysts to statistical drivers of asset prices, creating a unified framework that quantifies skew and clarifies risk-reward across asset classes.
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.