REGIME MAPPING
Markets move in regimes — periods characterized by distinct macroeconomic conditions. Understanding which regime we're in helps me adjust positioning and risk.
WHAT IS A MARKET REGIME?
A regime is a macro environment defined by growth, inflation, and policy dynamics. Think of it as the 'weather' of markets. Just as you dress differently for rain vs. sun, you should invest differently in expansion vs. contraction.
THE FOUR REGIMES
I use a simplified 2x2 framework: Growth Up/Inflation Down (Goldilocks — risk-on), Growth Up/Inflation Up (Reflation — commodities + equities), Growth Down/Inflation Up (Stagflation — cash + gold), Growth Down/Inflation Down (Deflation — bonds + quality).
SIGNALS I WATCH
Yield curve slope, PMI trends, CPI momentum, central bank rhetoric, credit spreads, and commodity price action. No single indicator is reliable — it's the mosaic that matters.
HOW I APPLY IT
Regime mapping doesn't dictate trades — it informs tilts. In Goldilocks, I increase equity exposure. In Stagflation, I reduce risk and increase hedges. The goal is to be roughly right, not precisely wrong.