Your Essential Weekly Preview: What You Need to Know

Regime Models and Market Catalysts

Market Regime:

• REFLATION-a risk-on regime favoring pro-cyclical assets. Policymakers are expected to support nominal growth and mitigate deflationary risks.

• Portfolio Strategy:

  • Favor Risk Assets over Defensive Assets:

    • High Beta > Low Beta, Cyclicals > Defensives, Value > Growth

    • Small or Mid Caps > Large Caps, International > US, EM > DM

    • Spread Products > Treasury’s, Belly > Short Rates > Long Rates

    • High Yield > Investment Grade, Energy Commodities > Agricultural > Industrial

    • Gold > USD > FX

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Global Liquidity:

• Modest liquidity increase projected medium-term.

US Macro Outlook:

• Next 3-6 months: REFLATION (growth ↑, inflation ↑) likely.

• Next 6-12 months: Same outcome expected.

• Three-Month Outlook:

  • Bearish: Bonds

  • Neutral: Growth Stocks

  • Bullish: Bitcoin, Commodities

  • Bearish: USD

• Moderate chance of risk-on regime sustainment.

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Positioning:

• Investor Stance:

  • Advisors: Overweight stocks, neutral bonds, underweight cash.

  • Speculators: Neutral stocks, underweight Treasurys, overweight Bitcoin, underweight commodities.

  • Systematic Funds: Neutral stocks.

  • Hedge Funds: Overweight risk assets (gross exposure).

• Valuations: Align with major bull market peaks-we need to see a rotation out of big tech in to other sectors.

Calendar

Monday, Dec. 2

• S&P Manufacturing PMI (Nov.): 48.8 (flat).

• ISM Manufacturing (Nov.): 47.5 (up from 46.5).

• Construction Spending (Oct.): +0.2% (up from +0.1%).

Tuesday, Dec. 3

• Job Openings (Oct.): 7.6M (up from 7.4M).

• Auto Sales (Nov.): -- (prior: 16.0M).

Wednesday, Dec. 4

• ADP Employment (Nov.): 158K (down from 233K).

• ISM Services (Nov.): 57.0 (flat).

• Factory Orders (Oct.): -0.3% (improved).

• Fed Beige Book

Thursday, Dec. 5

• Jobless Claims (Nov. 30): 215K (up slightly).

• Trade Deficit (Oct.): -$74.8B (narrowed).

Friday, Dec. 6

• Employment (Nov.): 200K (sharp rise).

• Unemployment (Nov.): 4.1% (flat).

• Hourly Wages YoY: +3.9% (down slightly).

• Consumer Sentiment (Dec.): 73.0 (up).

• Consumer Credit (Oct.): +$10B (up from $6B).