1. S&P 500 - Same Data, New Regime
2. Rotation Risk: QQQ Looks Stretched vs IWM
3. Re-visiting FX carry
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S&P 500 - Same Data, New Regime
S&P500’s exposure to nominal US growth – combining Qi’ssensitivity to tracking US GDP growth & 5y US inflation expectations – hashit its highest in 2 years. The chart captures four distinct regimes:
2023. Healthy Reflation. As the Fed tightening cycleended, sensitivity recovered. Markets re-embraced inflation as a growth signal.SPX followed.
Early 2024. Good News is Bad News. Strong data pushedback rate cut expectations. Higher nominal growth hurt rather than helped.Sensitivity went negative.
Q1 2025. Tariff Shock. Sharp but short-lived. Marketsfeared an inflation shock, not growth. Sensitivity collapsed. SPX sold offhard.
Today. Sensitivity is back at 2-year highs. With theIran risk premium fading and the tariff shock absorbed, US equities arere-pricing the macro backdrop. The emerging regime sees nominal growth as atailwind, not an inflation risk or rate risk.
The post Iran energy shock has given way to a domestic USgrowth story.
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