Excess Returns False Recession Alarms. Real Risks. | Aahan Menon on What Investors Are Missing
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Jul 16, 2025 Aahan Menon, the founder of Prometheus Research and an expert in systematic macro investing, dives into the reasons why recession indicators have failed to signal the current economic landscape. He discusses how changing monetary policy affects market sensitivity and why focusing on current data is essential. The conversation also uncovers the nuanced impacts of tariffs on corporate profits and business confidence, while challenging traditional investment strategies and emphasizing the importance of risk management in today's complex environment.
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Targeted Macro Views Per Asset
- Prometheus uses a targeted approach, creating asset-specific macro views rather than a monolithic framework.
- Growth and inflation affect assets differently so modeling them separately yields better macro forecasts.
Focus on Present Over Future
- The best way to predict the economy is by understanding the present better than the future.
- Macroeconomic data mostly reflects the present or lagged conditions, making real-time tracking more reliable than forecasting.
Current Economy Slowing, Not Recession
- The U.S. economy is slowing but not entering recession; growth is supported by consumption and intellectual property investment.
- Some cyclical sectors like manufacturing are weakening, yet broad GDP growth remains positive.