Consolidated Summary - October 11, 2024

Key Macro Questions: Will accelerating inflation trigger an INFLATION Market Regime? Answers: The Cleveland Fed's trimmed median and mean CPI suggest a continuation of the 'sticky inflation' theme; the PPI report shows slowing inflation with headline, core, and services PPI at 1.3%, 1.4%, and 1.2%; core PPI data indicates inflation has bottomed below the Fed's target. 42 Macro Research Analysis: Upside inflation surprises are unlikely to affect asset markets until the Fed revisits its labor market outlook, with about 100 basis points of rate cuts expected over four FOMC meetings and an additional 100 basis points potentially impacting USD strength and bond volatility. Market Regime: The GRID Model indicates an INFLATION regime (growth slowing and rising inflation) for 3-12 months; the Macro Weather Model points to a bearish stock outlook and a bullish bond outlook; meanwhile, the Global Macro Risk Matrix reflects a GOLDILOCKS, risk-on disinflationary environment. Quantitative Signals and Positioning Models: Short-term signals do not show significant overbought or oversold conditions, but high correction risk exists in both stocks and risk assets due to overweight positions and valuation extremes, with retail traders and active managers overexposed in stocks and underweight bonds and cash. Risk Management: A cautious strategy is advised, emphasizing balanced exposure during regime shifts and preparation for volatility in the bond market and U.S. dollar.