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Month In Macro
This report is part of our ongoing effort to provide economic and market guidance to our subscribers during a period of historic levels of uncertainty. This note aims to share our research team's internal checkpoint process in evaluating the current state of the economy as it pertains to markets. The pages that follow will have familiar content for those who follow our work, but with the added benefit of our connecting the dots across all the economic and financial data our systems use to make portfolio decisions. Our primary takeaways are as follows:
Nominal economic activity has decelerated with slowdowns in both growth and inflation.
Monetary and fiscal policies continue to be contractionary; however, increased credit creation by the private sector has offset this somewhat. This offset is likely to be transient.
The economic machine is moving to put increased pressure on business profitability, which will pressure labor markets.
Conditions are in place for a contraction in Real GDP beginning in Q1- Q2 of 2023. Our granular tracking of economic conditions suggests that we are now at a critical stage of the growth cycle, with the potential for the next few months to mark a significant deterioration in economic activity. We discuss all this and more in the pages that follow.
For those looking for how we systematically apply these views to investment markets, please reference our weekly ETF Portfolio. Below, we link to the latest positioning:
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Until next month.