MACRO REGIME MODEL
Our regime model is inspired by decades of research from the most prestigious macro funds, managers, and advisors. We find the rates of change in growth and inflation expectations to be the most reliable inputs for forecasting market regimes, and we layer on two conditional sub-regimes that capture transitional states the four base quadrants alone cannot express.
THE SIX REGIMES
The growth/inflation plane is divided into four base quadrants defined by whether growth and inflation are rising or falling. On top of those, two conditional sub-regimes — Guarded Inflation and Early Cycle — activate when specific trend gates are crossed inside the Inflation and Deflation quadrants, capturing transitional states with their own posture and risk profile.
EXPANSION
RISK-ONGrowth: Rising / Inflation: Falling
The offensive sweet spot. Growth is accelerating while inflation cools, giving equities and risk assets a strong tailwind. Rate cuts tend to be priced in and multiples expand.
INFLATION
RISK-ONGrowth: Rising (≥ 25% strength) / Inflation: Rising
Growth is strong and inflation is rising with it. Real assets, commodities, and inflation hedges lead. Central banks typically lean hawkish, but offensive positioning is still rewarded while growth strength holds above 25%.
GUARDED INFLATION
GUARDEDCONDITIONALGrowth: Rising (< 25% strength) / Inflation: Rising
A conditional sub-regime inside the inflation quadrant. Inflation is still climbing, but growth strength has slipped below 25%, too weak to absorb rising prices. Earnings and valuations come under pressure, so positioning tightens relative to full Inflation.
STAGFLATION
RISK-OFFGrowth: Falling / Inflation: Rising
The worst of both worlds. Growth is contracting while inflation refuses to cool, squeezing profit margins and forcing restrictive policy. Traditional hedges often fail and capital preservation becomes the priority.
DEFLATION
RISK-OFFGrowth: Falling (< -50% strength) / Inflation: Falling
Deep contraction. Both growth and inflation are falling hard, with growth strength below -50%. Long-duration Treasuries, gold, and defensive equities historically lead. The objective is to survive the drawdown, not catch the bottom.
EARLY CYCLE
EARLY CYCLECONDITIONALGrowth: Falling (> -50% strength) / Inflation: Falling
A conditional recovery sub-regime inside the deflation quadrant. Activates only after 64+ consecutive days in Deflation, once growth strength has attenuated back above -50%. The trend gate ensures we only re-risk when damage is verifiably easing, not on a false dawn. Historically one of the highest-return postures as risk assets front-run the cyclical turn.
REAL-TIME REGIME DETECTION
Relying on quarterly GDP and CPI prints presents a challenge: the data is already outdated the moment it lands. Markets act as forward-looking mechanisms, so we must anticipate future shifts in the cycle rather than react to stale prints.
Our approach leverages quant-level market analysis, integrating daily data to decode prevailing market regimes in real time. Grounded in rigorous backtesting since the 1990s, the regime catalysts balance historical credibility with present-day adaptability. By drawing from a broad array of inputs across sectors, indices, and economic indicators, we provide a comprehensive perspective on the market landscape, prioritizing data-driven decisions over storytelling.