Macro analysis
Growth, inflation, rates and the transmission from economy to markets.
Macro analysis studies the system around an asset. Growth, inflation, employment, credit and policy influence cash flows and discount rates, but market reaction depends on what was already expected.
Levels versus surprises
Markets often react to the difference between data and expectations, not whether the data is simply good or bad. Strong growth can hurt rate-sensitive assets if it changes the expected path of policy.
Rates and discounting
Interest rates affect borrowing costs and the present value of future cash flows. Longer-duration assets are generally more sensitive to changes in discount rates, all else equal.
Regimes and transmission
A relationship that held in one inflation or policy regime may reverse in another. Ask how a shock passes through earnings, currencies, yields, credit and positioning rather than relying on a fixed slogan.
The lesson in three lines.
- 1Markets price expectations, not headlines in isolation.
- 2Rates influence financing and valuation.
- 3Macro relationships change across regimes.