Invest Smarter with the Economy’s Pulse

Decoding the Big Three: Growth, Inflation, and Employment

Quarterly GDP tells a growth story with lags and revisions. Smart investors combine it with nowcasts, inventories, and final sales to consumers before committing capital across cyclicals, defensives, and duration-sensitive assets.

Decoding the Big Three: Growth, Inflation, and Employment

Headline CPI grabs attention, but core measures and PCE often steer central bank policy. Tracking shelter components, services ex-housing, and sticky prices helps gauge rate paths and equity sector rotation likelihood.

Interest Rates, Central Banks, and Valuation Crosswinds

From CPI to the Policy Path

Sticky core inflation often extends restrictive policy, raising real rates and challenging long-duration assets. Watch forward-looking measures, such as services inflation and breakevens, to anticipate shifts before formal guidance arrives.

Yield Levels and Equity Multiples

When real yields climb, the present value of distant cash flows falls. Growth stocks can underperform even on strong earnings. Pair earnings revisions with rate moves to avoid valuation traps.

A Brief Anecdote: The Surprise Hike

In 2018, one reader ignored rising core inflation and firm wage growth, betting on cuts. After a surprise hawkish tone, their high-duration tech bets slumped. They now track core services monthly.

Jobs, Confidence, and the Consumer Engine

Openings and quits illuminate bargaining power and wage momentum. A cooling quits rate can foreshadow softer retail sales and a shift from discretionary to staples within equity allocations.

Jobs, Confidence, and the Consumer Engine

Nominal growth can mask pressure from inflation. Adjust retail sales for price changes to gauge real demand. Mix in card-spend trackers and earnings commentary to validate macro signals quickly.

Manufacturing, Services, and the Rhythm of Business Activity

Expansion versus contraction levels matter, but the new orders minus inventories gap often leads production. Rising orders can precede rebounds in industrials, semiconductors, and transport equities.

Manufacturing, Services, and the Rhythm of Business Activity

In services-heavy economies, services PMIs can better predict earnings breadth. Watch input costs versus output prices to assess margin risk, particularly for consumer services and healthcare providers.

Yield Curve, Credit Spreads, and Recession Probability

A 2s10s inversion historically precedes downturns, but lags vary. Combine it with leading indicators, housing, and bank lending surveys to avoid exiting risk assets too early.

Yield Curve, Credit Spreads, and Recession Probability

High-yield and investment-grade spreads widen as default fears rise. Pair spread changes with earnings revisions to adjust exposure to cyclical credit and consider upgrading quality when risk compensation thins.

Yield Curve, Credit Spreads, and Recession Probability

Share your playbook: do you trim cyclicals on steepening after inversion, or add duration? Subscribe to get our monthly checklist template and compare it with your indicator watchlist.

Global Indicators and Currency Ripples

A rebound in China’s manufacturing PMI may lift metals and shipping, while weak European PMIs can weigh on luxury demand. Translate these shifts into sector tilts and hedged positions.

Global Indicators and Currency Ripples

Faster disinflation in one region can pull rate expectations lower, weakening its currency. Exporters may gain margin tailwinds; importers might struggle. Align hedges with your revenue currency mix.

From Indicators to Decisions: A Repeatable Investment Framework

When inflation cools but jobs remain tight, decide which signal dominates. Assign weights, define time horizons, and require confirmation from at least two independent indicators before adjusting exposures.