Instantly Improve Your Returns By Spotting Economic Inflection Points

The performance of various asset classes and equity sectors varies greatly depending on the trending direction of economic growth and inflation. Understanding the economic cycle and the rate of change in economic growth is the biggest factor for long-term returns.

Based on the Global PMI, a widely followed data set, in addition to the short leading economic indicators at EPB Macro Research, economic growth peaked in January 2018, the most recent pivot point you should have made in your portfolio allocation.

Inside EPB Macro Research, we have been writing about the historical performance of assets and equity sectors during different periods of growth and inflation.

Tomorrow, we will be highlighting the average excess return of various assets and equity sectors during periods of accelerating growth and decelerating growth.

Since January 2018, the last pivot point, asset and sector returns are nearly perfectly consistent with the historical analysis suggesting defensives should be leading and cyclical sectors lagging. 

Pivot Point
Source: Bloomberg, EPB Macro Research

While consensus is overly focused on short-term valuation measures, the largest gains have been missed by most investors in defensive equity sectors such as utilities due to a lack of attention on the growth rate cycle.

At EPB Macro Research, in our model portfolio published to members, we have been long XLU and short KRE since May 2018 based on this pivot, capturing a greater than 30% spread in these sectors in just over 12 months.

To receive tomorrow's full note on profiting in different regimes of economic growth and to learn about our process for spotting and profiting from economic inflection points, click the link below for a 14-day no-risk free trial.

If you understand the economic cycle, you can profit from the opportunities that emerge from its ebb and flow.

At EPB Macro Research, in addition to the elite level macroeconomic research, model asset allocations, and risk management system, you will gain confidence in your understanding of economic cycles and your ability to profit in any economic environment.

You will understand where to put your money and when to move it in all stages of the economic cycle.

Take advantage of the 14-day free trial and join the community before the price increase.

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