Macro, Alpha & Risk | Aahan Menon Ep.9

Episode 9:

On today's show I speak with Aahan, founder of Prometheus Research, a research service with the goal of democratizing finance making institutional-quality insights and research available to the public.

1. Background of Macro research

• Understanding underlying mechanisms over analyzing data
• Monetary contracts and how we got here
• Money grows faster than underlying labor and capital
• Monetary policy - tighter is needed to tame inflation
• Interest rates need to be higher than CPI to lower future inflation

2. Monetary and cost push inflation

• Money infused into personal incomes and economy with production and labor
• Productivity down - less output/dollar
• Rise in costs of capital, production, labor
• Margins compressed with dilution of value

3. PMI, ISM and Manufacturing Reports

• Manufacturing forward indicator for earnings
• Real demand coming down
• Consumption declined 
• Excess production and inventory build

4. Tightening liquidity 

• Returns on assets relative to cash is negative
• Pressures on production and employment increasing
• Lower output and less need for employment
• Stagflationary Nominal Growth to Stagflation
• Real incomes and spending weaker so business sales also weaker

5. GDP Nowcast

• Weakening in real growth relative to previous year
• Real GDP could go negative near term

6. Returns not a feature of asset class but a feature of sample selection

 

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