A Turning Point?

The Prometheus Multi-Strategy has gone from maximum long equity exposure to running a negative equity beta this week.

Our programs have been maxed out because the economy has consistently beaten expectations. That phase may be ending.

1/18 We evaluate. 2/ The forces behind the reflation—strong households and AI capex—now face a labor-market drag that’s hard to ignore.

The issue isn’t that growth is about to collapse.

It’s that pricing has moved beyond what the economy can deliver.

Notes From Prometheus Multi-Strategy 🤖

The Prometheus Multi-Strategy Program is our primary offering to institutional investors, systematically trading 40 global markets.

We share the latest macro insights coming from this process:

1/ Jobs Cycle Slowing? 2/ Jobless claims disappointed expectations, but the level of claims remains far from recessionary territory—slowing, not contracting.

Notes From Prometheus Multi-Strategy 🤖

The Prometheus Multi-Strategy Program is our primary offering to institutional investors, systematically trading 40 global markets.
We share the latest macro insights coming from this systematic process:

1/ Housing Green Shoots? 2/ New home sales surged +20.9% in August (vs –0.3% expected). Y/y single-family sales ~+3.2%. Big print; high volatility.

Notes From Prometheus Multi-Strategy 🤖

Prometheus Multi-Strategy Program is our primary offering to institutional investors. The program systematically trades 40 global markets.

We share the latest macro insights coming from this systematic prices:

1/ Construction Cracks. 2/ Construction is rolling over.

Spending is contracting in both residential & nonresidential.

Our systems are reducing equity risk, expanding bond shorts, and holding gold/TIPS.

Keep Your S&P 500, But Own Some Protection?

$SPY is the core exposure for many. While the S&P 500 is a good asset over the long term, it can have big drawdowns.

What if you can keep all your S&P 500, but protect some of the downside?

1/ Enter Crisis Protection Program 2/ For a variety of reasons, many investors want to maintain passive exposure to the S&P 500. But the stock market can go through periods of very weak performance.

Our Prometheus Crisis Protection Program seeks to offer a diversifier during these periods of underperformance..

Prometheus Crisis Protection Program 🔥🤖🚀

A Portfolio With A 2.0 Sharpe Ratio During $SPY Drawdowns

The program seeks to offer a diversifier during periods of financial instability using $GLD, $TIP, & $VIXY

Launch Discount: 33% OFF.

1/ Our process 🧵 2/ Most investors are seeking to either match S&P 500 returns or outpace them over the long term. Regardless of whether investors seek to match our outperform equity returns, most investors seek higher risk-adjusted returns than simply holding market beta...

Is The Current Labor/Output Relationship Sustainable?

In recent months, employment has softened significantly after a period of strength. This has often prompted the question as to whether activity will fall to reflect this weaker employment growth.

1/1 9 We evaluate 🧵 2/

As ever, before we describe mechanics before diving into these observations.

The core principle that drives this thread is that labor market growth via employment is the dominant driver of sustainable long-term growth in the economy.

This is because labor both earns….

Our primary job as macro investors is to adapt as the macro regime shifts.

To do that, we need to recognize which regime we're in and then estimate what regime we could be in tomorrow.

1/5 What does this process tell us today? 2/5 Using a blend of fundamental & market data, we can try to estimate which of four regimes we can be in:

1. Rising Growth + Falling Inflation
2. Falling Growth + Falling Inflation
3. Rising Growth + Rising Inflation
4. Falling Growth + Rising Inflation

We expect to be in a mix of 1 & 3. Regime probabilities:

Rising Growth + Falling Inflation = 64%
Rising Growth + Rising Inflation = 36%

Macro Mechanics🧵

The best information we can ever provide investors is the mechanics of how we think about macro conditions over time rather than what we think about them at any particular time.

Below we share a list of our most comprehensive Macro Mechanics notes. Enjoy!⬇️ 1. Why Does GDP Growth Matter?

We offer our thoughts on what we consider table stakes in trading markets and a precise understanding of why Growth markets to investors.

Link: prometheusresearch.substack.com/p/why-does-gdp…

The best information we can ever provide investors is the mechanics of how we think about macro conditions over time rather than what we think about them at any particular time. We share our framework for thinking about bonds and how to time them. 🧵 Bonds are fixed-income assets issued by the government that offer compensation as a reward for migrating from cash. In turn, cash seeks to entice savers by offering a return that largely neutralizes the depreciation of money caused by inflation.

The best information we can ever provide investors is the mechanics of how we think about macro conditions over time rather than what we think about them at any particular time.

We share our framework for thinking about stocks and how to time them. 🧵 Before discussing how we think about making bets on the stock market, we briefly provide an overview of what a stock is. A stock represents a share of ownership in a company. When you buy a stock, you are a partial company owner.

Prometheus ETF Portfolio 3.0

1/ Prometheus ETF Portfolio was our first retail strategy, launched in November 2023. The strategy has achieved our goal of achieving strong risk-adjusted returns relative to cash with limited capital drawdowns in depth and duration: 2/ Prometheus ETF Portfolio aims to allow everyday investors to access an investment solution that combines active macro alpha, passive beta, and strict risk control, all in an easy-to-follow, low-turnover solution. Thus far, we have been successful in generating these outcomes.

While Labor Markets Weaken? 🧵

Employment growth has begun to deviate meaningfully from GDP numbers. This is unlikely to persist.

Will output come down to meet employment, or will labor markets accelerate?

1/23 Thread. 2/Employment & output are at odds. To understand what’s driving the gap between them, we examine each individually. We then reconstruct the gaps between spending & employment for major industries, allowing us to assess 1) what’s driving divergence, & 2) its sustainability

What Drives Inflation?

Thoughts on inflation mechanics 🧵

1/20 At its core, inflation is a simple concept: the change in the overall price level in the economy. This price level can be measured in various ways: CPI, PCE, PPI, GDP Deflator, etc. 2/20 Like economic growth, inflation represents a mechanical framework that has more power than any specific definition.

Why Does GDP Growth Matter to Macro Assets?

Growth conditions have a nuanced transmission mechanism to various asset classes.

1/ A thread on what we consider table stakes in trading markets and a precise understanding of why Growth markets to investors. 2/ The exact measure & definition of growth are less important than conceptually understanding why growth matters to macro assets, i.e., stocks, bonds, commodities, constantly experience price changes to reflect ongoing shifts ..

We're going through our Macro Monitor for this month. I'm going to drop A LOT of data here and some observations on each. Not a synthesis. 🔽 Daily growth guages showing softness. More makes us more bearish

Are We In A Recession Yet?

A recession is a persistent and pervasive decline in output, spending, income, and employment.

1/14 A thread looking across a wide range of measures to see whether we meet these criteria... 2/ Let's start with GDP numbers. Our current GDP Nowcast currently shows a nominal GDP of about 5.3%, while real GDP accounts for about 2.5%. Not close to recessionary.

Mind that these are Nowcast numbers, so they are fairly timely, unlike the official numbers:

There are many reasons that we expect a Slowing, But Growing economy.

One of them is that the economy has run a little hot relative to the ongoing fundamental trends in the labor market.

1/10 We look through where the pressures are concentrated... 2/ The labor market is dominant in driving variation in overall economic activity. While business cycle pressures may originate in other areas of the economy, the labor market is the ultimate transmission mechanism for cyclical conditions to aggregate spending and income...

Growth Views 📉

1/4 For the latest data through July, our systems place Real GDP growth at 3.91% versus one year prior, driven primarily by a sequential acceleration in Private Investment. 2/4 However, upon zooming in we observe that most of this acceleration is attributable to current inventory dynamics which are volatile and not durable.

What's Moving Markets? 🧵

1/6 Over the last week, markets have moved in a manner consistent with a slowing but growing economy. After a large volatility shock, markets have now moved to price these regime conditions consistently over the last week. 2/6 Over the last week, macro market rose in aggregate. Equities and gold rose significantly, bonds were modestly positive, and commodities fell significantly.

Prometheus Substack: Going Paid 🔥🤖🚀

Prometheus was founded to bring the best & most actionable macro tools to everyday investors. Today, we're very excited to launch a comprehensive suite of systematic tools for retail investors.

1/6 Details on all we offer on Substack⬇️ 2. Prometheus Asset Allocation:

Prometheus Asset Allocation is the easiest way to add macro to your investment portfolio. Using our proprietary systematic process, our asset allocation program rotates between three liquid ETFs just once a month.