SPY’s Dynamic Relationship with GDP Growth & Why it Matters Today

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The way risky assets react to growth isn’t constant. Markets regularly flip between pricing for growth and pricing for risk.

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Plenty of history backs this up:

• 1990s: P/Es tracked Fed policy more than the ISM

• 2009: Massive PE expansion despite negative earnings

• 2012: Draghi’s “Whatever it takes” turned the Eurozone around while it was still in recession

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The point: equities discount the future, so PE expansion can offset weak growth data.

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This is exactly why Qi’s risk-model framework matters — it helps you spot when markets switch regimes across macro factors.

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Since 2021, there have been 3 distinct phases in SPY’s relationship with US GDP growth expectations

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1. Jun 21 → Sep 23: Good news = good news

A clean macro regime. Stronger GDP → better earnings outlook → supportive for equities.

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Continue reading our analysis on the other headlines by downloading the PDF below

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