This publication is a short excerpt from our weekly Prometheus ETF Portfolio note. While we reserve our forward-looking views on macro and portfolio construction to paid subscribers, we offer our high-level diagnostic of macro conditions here as we aim to offer value to the broader public.
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Let us dive into our assessment of macroeconomic conditions:
Markets continued to price rise real growth and expand liquidity.
Economic data momentum continued to be pushed higher again, consistent with the ongoing expansion.
Our latest real and nominal GDP estimates show strong output and spending, likely supporting the current market regime.
Let's dive into the data driving our assessment. We begin by examining the path of asset price returns over the last week:
As we can see above, equities posted the strongest returns, though gold offered the smoothest path for returns. This pattern of performance is continuous with liquidity-supporting assets across dimensions, though treasuries continue to face headwinds. This pricing came as home sales and jobs data continued to push our economic data momentum higher. Below, we show how economic data momentum expanded over the last week:
For a further understanding of how economic dynamics have been priced into markets, we show our tracking of market-implied macroeconomic regime probabilities below, which reflect the aforementioned dynamics:
Markets continued to price regime probabilities consistent with a rising real growth and liquidity environment. This pricing remains consistent with our tracking of economic conditions. We share our latest GDP Nowcast, which reflects these dynamics. For the latest data through January, our systems place Real GDP growth at 2.97% versus one year prior:
These estimates show strong output and spending and keep recession probabilities at muted. We are likely to persist in the current market regime. For the complete 15-page note, click below: