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3/11 - Weekly Roundup: Downgrading growth, peak credit fear, get long duration, jobs, and housing

April 8, 2022
Benjamin Dunn

As expected, sell-side growth downgrades and recession calls are gathering steam as inflation continues to outpace wage growth and the impacts of the energy spike get factored into the sell-side models:

As with last week, the counterpoint to the demand destruction fear is the wallet share devoted to Food & Energy:

And it takes a lot to push the US into recession:

And short of the unthinkable occurring in Europe, the credit markets appear to have priced a lot already:

Which leads me to this excellent (and attached) piece from the team at Rareview Capital.  While the whole piece is worth reading, the takeaway is pretty compelling in its elegance and simplicity:

The implications for fixed income investing turn out to be counterintuitive and certainly well outside consensus positioning:

I’ll save everyone the trouble of looking up the 5-year yield:

And is probably not as tight as it currently appears (which should help restrain wage pressures):

Housing continues to reflect the strength of the labor market as well as supply issues and defies the consensus view on the impact of rates on demand:

I’m just throwing this in here as I’ve had some requests for data on geopolitical drawdown duration:

Here’s MTD and YTD hedge fund performance numbers from MS for those with a strong stomach:

Lastly, it’s baaaack!  Will anyone care?:

Benjamin Dunn
COO @ Prometheus Alternative Investments