The Observatory
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Welcome to The Observatory. The Observatory is how we at Prometheus monitor the evolution of both the economy and financial markets in real-time. We had some technical issues today and thus will only provide our top three observations, and resume regular coverage once again tomorrow. Here are the top developments that stand out to us:
5 out of 11 Equity Sectors are now in a negative according to our trend models. Our market regime signal has picked up on this, with markets now pricing (+) G (-) I with a 0% probability. Long Equity positions show high noise to signal and should be sized minimally.
Our Market Regime Monitor is now showing the dominance of (-) L, i.e. tightening liquidity, on a one-month basis. Additionally, the market discounting of rising growth and inflation, i.e. (+) G (-) I, is now at 0%. Regime risk is elevated, with high potential for a shift to (-) L in the following weeks.
Consistent with market pricing, our High-Frequency Growth Impulse measure continues to trend lower. This backdrop looks increasingly poor for the next ISM manufacturing report:
We will refresh our systematic updates tomorrow. Stay nimble!