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To today’s note, which we will publish in positions-only format. We will update our macro cycle monitors and regime probabilities in our Week-Ahead note.

Basic Trend Program

Trend following is a good solution for many investors, as it is intuitive and provides solid risk control. However, the signals used in trend following are fairly basic, so we don’t think there should be a high barrier to entry for basic trend-following strategies. As such, we will provide access to a Basic Trend Program at zero cost to users for a portfolio of Stocks, Gold, Bitcoin, and Bonds. The program uses three layers of portfolio construction: a risk-parity base, a two-speed trend overlay, and a 15% maximum volatility cap. These layers are applied versus a benchmark beta of 60% Stocks, 15% Bonds, 15% Gold, and 10% Bitcoin. We will release a methodology note soon, but in the meantime, we share the summary statistics and current positioning below:

This program currently has a 100% max long position in Stocks, a 0% max long position in Bonds, a 50% max long position in Gold, and a 50% max long position in Bitcoin. In risk-parity terms, this translates to Stocks: 42%, Bonds: 0%, Gold: 9%, Bitcoin: 6%, and Cash: 44%. This reflects an expected volatility target of 8%.

Please note that these positions do not directly reflect the Prometheus trend measures, which are relevant to our proprietary and paid programs. The positions in our Basic Trend Program use an equal split between 1-month and 6-month trends.

While basic trend following is a strong solution for many investors, there is a world of signals and strategies beyond it. We begin to address these in the following sections.

Macro Cycle Program

Our systems aggregate a wide range of fundamental economic data to produce timely, proprietary estimates of the current stages of the macro cycle. This process has navigated this year quite well thus far:

We visualize the simulated path of using this process below:

Combining these indicators, a Macro Cycle Allocation would be long-term

Read more

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This report is one of many only shared only with clients of Prometheus Institutional. If you are a professional investor and would like access to our real-time signals and analysis, email us at info@prometheus-research.com for more information.

Read the full report here:

The Observatory, New Orders

474KB ∙ PDF file

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Until next time

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Read the full systematic update here:

The Observatory, Permits, Starts & Completions

583KB ∙ PDF file

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For context, we visualize the live returns for our Integrated Program below:

Our programs are operating in line with their long-term expectations. Today, the S&P 500 Program is positioned as follows:

There are four major takeaways from these positions:

• Beta Timing: Our beta timing measures continue to show downward pressure on equity indexes from locally expensive equities, which may have rallied too dramatically.

• Sector Selection: Macro markets are experiencing a sustained inflation shock, which will change the distribution of sector returns. Across the equity sectors, our signals favor technology and industrials.

• Risk Control: Our risk control continues to guide us effectively in managing drawdowns. In a multi-standard deviation event across all our positions, our expected drawdown is 8%.

• Bond Overlay: While we face an ongoing inflation shock in market pricing, fundamental conditions are beginning to align more with a weakening growth backdrop. This weakness of growth, coupled with a modestly positive yield curve, makes treasuries and amenable exposure within a portfolio. This positioning is primarily about carry and diversification during a growth slowdown, rather than an outright alpha view.

To this allocation, we add our Crisis Protection Program. The Prometheus Crisis Protection Program is allocated as follows:

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To complement our existing offering for individual investors, we offer excerpts and insights from The Monitor. If you are a professional investor and would like access to our real-time signals and analysis, email us at info@prometheus-research.com for more information.

Our observations are as follows:

• The latest readings across our gauges of economic activity continue to suggest an extremely strong nominal growth backdrop.

• The inflation shock to the CPI remains elevated, and the rate of change remains downward.

• Our macro market regime probabilities are back to favoring inflationary regimes— now with a rising growth bias.

Amid this backdrop, the Prometheus Multi-Strategy Program is now running with a much more neutral risk profile across assets—seeking to catch a rally in US fixed income while maintaining a more neutral bias across global asset markets. This portfolio exposure is technical rather than fundamental, and the positions may unwind quickly. While the Prometheus Multi-Strategy Program is not actively deploying significant risk right now, our process shows evolving opportunities in the commodity landscape. We scan through our macro monitors before diving into this thread.

We show that our timely NGDP readings have remained stable through April:

While our CPI estimates continue to decelerate from their recent peak:

Further, we show how our forward-looking market regime probabilities have shown a transition back to inflationary conditions:

Despite these inflationary-regime expectations, the Prometheus Multi-Strategy Program remains cautious due to regime volatility and potential instability. We show the current positioning of the Prometheus Multi-Strategy Program below:

While Prometheus Multi-Strategy is not currently deploying material directional risk exposure, we see two avenues for future signal strength. First, we see a positive backdrop for the oil complex, particularly for back-dated contracts. While our short-term signals for the energy complex have turned neutral since April 8, we are starting to see some shifts in the dynamics underlying price action— becoming more conducive to oil beta. Principally, energy markets are composed of two participants: speculators and hedgers. Speculators seek financial gain through their exposure to commodity futures. Hedgers, on the other hand, seek insurance against future revenue volatility. While hedgers seek to minimize hedging costs, they are not profit-seeking in futures markets. This relative near-term price-insensitivity makes their flow mechanical and more consistent in markets. As such, hedgers are a countercyclical force in markets— pushing down prices relative to their fair value as commodities rise due to shortages. This creates a conducive backdrop for owning energy futures beta. Below, we show how our positioning regime monitor allows us to classify periods into those where speculators are dominant versus those where hedgers are dominant:

While our systematic classification still shows a speculative-dominant market, the numbers under the hood are quite evenly matched; i.e., there is a large hedging presence in markets today as well. Further, we see potential for us to transition into a hedging-dominant market as speculators unwind their positions. While not an optimal backdrop for the energy complex, it is nonetheless a positive one. However, our short-term signals for oil continue to show pressure on spot prices:

As such, the best expression for long energy exposures, which we continue to believe tactically necessary in this backdrop, is via back-dated contracts (6 months and further). The Prometheus Expected Return Program has benefited from these exact types of exposures year-to-date:

Tactical exposure to energy, with strong risk management, remains the best way to protect and compound portfolios during this regime. The latest developments indicate that the opportunities have shifted from the front of the curve to the back.

Until next time.

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To today’s note. Our observations are as follows:

• Macro assets continue to show inflation dominating cross-asset price action, with commodities leading and fixed income falling.

• The business cycle remains in an expansion, pressures on monetary policy to tighten have risen, and capacity utilization remains strong.

• A procyclical allocation looks attractive, but with inflationary tilts.

Let’s begin sharing the data that drives our current assessment of the macro regime and our subsequent risk management and positions.

Basic Trend Program

Trend following is a good solution for many investors, as it is intuitive and provides solid risk control. However, the signals used in trend following are fairly basic, so we don’t think there should be a high barrier to entry for basic trend-following strategies. As such, we will provide access to a Basic Trend Program at zero cost to users for a portfolio of Stocks, Gold, Bitcoin, and Bonds. The program uses three layers of portfolio construction: a risk-parity base, a two-speed trend overlay, and a 15% maximum volatility cap. These layers are applied versus a benchmark beta of 60% Stocks, 15% Bonds, 15% Gold, and 10% Bitcoin. We will release a methodology note soon, but in the meantime, we share the summary statistics and current positioning below:

This program currently has a 100% max long position in Stocks, a 50% max long position in Bonds, a 100% max long position in Gold, and a 50% max long position in Bitcoin.

In risk-parity terms, this translates to Stocks: 41%, Bonds: 31%, Gold: 17%, Bitcoin: 5%, and Cash: 6%. This reflects an expected volatility target of 11%.

Please note that these positions do not directly reflect the Prometheus trend measures, which are relevant to our proprietary and paid programs. The positions in our Basic Trend Program use an equal split between 1-month and 6-month trends. We share the Prometheus trend gauges for each asset below. We begin with stocks:

Equity trends have snapped back to positive. Next, we turn to bond market trends:

Bond market trends remain negative. We now move on to broad commodity aggregates:

Commodity trends remain extremely strong amid geopolitical tensions. Next, we examine our macro trend signals for Gold:

Gold trends are now neutral. Finally, we examine our trend signals for Bitcoin:

Bitcoin remains in a downtrend.

While basic trend following is a strong solution for many investors, there is a world of signals and strategies beyond it. We begin to address these in the following sections.

Macro Cycle Program

Our systems aggregate a wide range of fundamental economic data to produce timely, proprietary estimates of the current stages of the macro cycle. This process has navigated this year quite well thus far:

We visualize the simulated path of using this process below:

We share some of the underlying gauges driving these allocations, starting with our signals for business cycle conditions:

Our latest readings continue to indicate an expanding business cycle. Next, we turn to monetary policy pressures. Our monetary policy gauge measures the pressures on the Federal Reserve to move monetary policy based on the trade-off between growth and inflation data. The higher our readings, the more pressure there is to hike policy rates. The lower the gauge, the more pressure there is to cut policy rates.

Pressures on monetary policy to tighten have further increased due to the energy price shock. Next, we turn to measures of economic tightness. Our gauges of manufacturing tightness tell us whether the economy is running up against capacity constraints when its readings are high, or when there is a significant amount of economic slack when readings are low:

Our latest readings show that manufacturing capacity utilization is rising. Combining these indicators, a Macro Cycle Allocation would be

Read more

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Read the full systematic update here:

The Observatory, Jobless Claims Monitor

565KB ∙ PDF file

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Read the data here:

The Observatory, Monthly Gdp Monitor

656KB ∙ PDF file

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From a comprehensive assessment of the oil shock on the macro data to how to structure and trade it in markets, Aahan and Bob covered it all. Check it out:

Until next time.

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For context, we visualize the live returns for our Integrated Program below:

Our programs are operating in line with their long-term expectations. Today, the S&P 500 Program is positioned as follows:

Read more

Subscribe now

To complement our existing offering for individual investors, we offer excerpts and insights from The Monitor. If you are a professional investor and would like access to our real-time signals and analysis, email us at info@prometheus-research.com for more information.

Our observations are as follows:

• Our fastest measures of economic activity suggest that NGDP remains elevated and resilient, despite weakness in equity markets. This is to be expected as the economic effects of an inflation shock require both significant and prolonged inflation to materially impact spending and output.

• The inflation shock to CPI remains elevated, but the rate of change has begun to turn downward.

• Macro markets have priced a regime shift, with our macro regime probabilities for inflation collapsing.

While the inflationary effects of the run-up in oil prices will continue to have a material impact on the economy and markets, it is essential to recognize that a marginal shift in oil shortages currently priced into markets will result in a short-term disinflationary market regime. As such, the Prometheus Multi-Strategy Program, after running at maximum risk in tactical long-energy exposures, is now changing its risk profile, materially reducing its exposure to

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The bar to be on this list is high. The firms and individuals on this list provide some combination of data, insight, acumen, or experience that we cannot systematically replicate internally. We regularly examine their work and use it as a lever to improve our own. We engage with these perspectives to sharpen our thinking, stress-test our frameworks, and expose blind spots that inevitably emerge in any systematic approach. In some cases, we agree. In others, we do not. Both are valuable. What matters is that each contributes something distinct, whether data, perspective, or methodology, helping us build a more complete picture of an ever-evolving investment landscape. By sharing this list, we hope to provide readers and clients with a guide to the best independent research providers to use when deciding how to allocate their attention and resources.

Inclusion is not about agreement or endorsement of every view of those on the list, but about a consistent demonstration of rigor, clarity, and originality. In that sense, this list serves as a benchmark for what we believe constitutes consistent high-caliber work. The list is not complete, and we will continue to add to it over time. The first three names on this list, which we release today, reflect our longest-standing subscriptions and relationships. We will continue to share a new name on this list every week to give each addition its due attention. The list will be maintained in alphabetical order. Without further ado, here are the first three names on The Prometheus List:

Andy Constan:

Damped Spring is the best resource for thinking through market pricing. Andy’s background, having worked at two of the premier discretionary and systematic macro hedge funds, makes his work truly unique. Damped Spring offers some of the best work on the interrelation between flows and risk premiums available, but crucially, it also offers significant expertise in structuring views around these macro drivers of assets. They also offer a variety of free investor education, which we have found valuable for both recreational and professional investors.

Damped Spring 101

Damped Spring Finance and Investing Substack

: Nonconsensus

Nonconsensus is our primary go-to for comparing notes on the evolution of the US economy relative to what’s priced into markets. Bob provides an extremely cohesive picture of the evolution of the economy and its prospects, and then compares that with cross-asset pricing. If you’re looking for an insightful, systematically actionable way of tracking the economy, Nonconsensus is for you. Of course, Nonconsensus also showcases Bob’s expertise across a wide variety of topics beyond traditional US macro—in-depth in-depth assessments of the US financial system, systematic portfolio construction principles, and regular evaluations of the global economic landscape are among the things we always expect Nonconsensus to shed light on. It is one the best resource for tracking the narrative evolution of the global economy, with a US focus.

Nonconsensus

A daily look into the thinking of veteran macro investor Bob Elliott as he navigates some of the most challenging market dynamics he's seen over his career.

By Bob Elliott

Michael Howell:

Capital Wars is our primary reference for understanding liquidity and its transmission into asset prices. Michael is the pre-eminent authority on liquidity. We have found this work to be essential in expanding the universe of macro analysis beyond growth and inflation to include balance sheet concepts, which are an increasingly important consideration in an extremely financialized global economy.

Capital War’s approach is truly unique and data-driven. If you’re looking for a systematic lens on liquidity as a core driver of macro and markets, Capital Wars is for you.

Capital Wars

Global Liquidity Insights

By Michael Howell

Finally, it’s important to note that there is no way to buy your way onto this list, and there never will be. But if you believe someone should be considered for inclusion, let us know.

Until next time.

Subscribe now

To today’s note, which we will publish in positions-only format.

Basic Trend Program

Trend following is a good solution for many investors, as it is intuitive and provides solid risk control. However, the signals used in trend following are fairly basic, so we don’t think there should be a high barrier to entry for basic trend-following strategies. As such, we will provide access to a Basic Trend Program at zero cost to users for a portfolio of Stocks, Gold, Bitcoin, and Bonds. The program uses three layers of portfolio construction: a risk-parity base, a two-speed trend overlay, and a 15% maximum volatility cap. These layers are applied versus a benchmark beta of 60% Stocks, 15% Bonds, 15% Gold, and 10% Bitcoin. We will release a methodology note soon, but in the meantime, we share the summary statistics and current positioning below:

This program currently has a 100% max long position in Stocks, a 0% max long position in Bonds, a 50% max long position in Gold, and a 50% max long position in Bitcoin.

In risk-parity terms, this translates to Stocks: 30%, Bonds: 0%, Gold: 6%, Bitcoin: 4%, and Cash: 60%. This reflects an expected volatility target of 8%.

Please note that these positions do not directly reflect the Prometheus trend measures, which are relevant to our proprietary and paid programs. The positions in our Basic Trend Program use an equal split between 1-month and 6-month trends.

While basic trend following is a strong solution for many investors, there is a world of signals and strategies beyond it. We begin to address these in the following sections.

Macro Cycle Program

Our systems aggregate a wide range of fundamental economic data to produce timely, proprietary estimates of the current stages of the macro cycle. This process has navigated this year quite well thus far:

We visualize the simulated path of using this process below:

Combining these indicators,

Read more

Subscribe now

To today’s note, which we will publish in positions-only format.

Basic Trend Program

Trend following is a good solution for many investors, as it is intuitive and provides solid risk control. However, the signals used in trend following are fairly basic, so we don’t think there should be a high barrier to entry for basic trend-following strategies. As such, we will provide access to a Basic Trend Program at zero cost to users for a portfolio of Stocks, Gold, Bitcoin, and Bonds. The program uses three layers of portfolio construction: a risk-parity base, a two-speed trend overlay, and a 15% maximum volatility cap. These layers are applied versus a benchmark beta of 60% Stocks, 15% Bonds, 15% Gold, and 10% Bitcoin. We will release a methodology note soon, but in the meantime, we share the summary statistics and current positioning below:

This program currently has a 100% max long position in Stocks, a 0% max long position in Bonds, a 50% max long position in Gold, and a 50% max long position in Bitcoin.

In risk-parity terms, this translates to Stocks: 28%, Bonds: 0%, Gold: 6%, Bitcoin: 4%, and Cash: 63%. This reflects an expected volatility target of 8%.

Please note that these positions do not directly reflect the Prometheus trend measures, which are relevant to our proprietary and paid programs. The positions in our Basic Trend Program use an equal split between 1-month and 6-month trends.

While basic trend following is a strong solution for many investors, there is a world of signals and strategies beyond it. We begin to address these in the following sections.

Macro Cycle Program

Our systems aggregate a wide range of fundamental economic data to produce timely, proprietary estimates of the current stages of the macro cycle. This process has navigated this year quite well thus far:

We visualize the simulated path of using this process below:

Combining these indicators, a Macro Cycle Allocation would be

Read more

Subscribe now

For context, we visualize the live returns for our Integrated Program below:

Our programs are operating in line with their long-term expectations. To today’s note, which we will publish in “positions-only” format.

Read more

Stage I- Cross-Asset Price Shifts: Global equity and fixed-income markets respond to the spike in energy prices. These shifts are near-immediate, reflecting correlations and relative-value trading.

Stage II- Inflation Shock: Energy prices shift, if sustained, begin to make their way to the consumer, and to measured inflation (CPI, PPI, PCE, etc.). This pass-through occurs relatively quickly, with energy prices passed through to consumers within approximately one month.

Stage III- Demand Response: As consumer prices and measured inflation trends become sustained, real demand responds. This process takes several months as the economy digests higher prices and consumers and businesses adjust their activity based on their current financial conditions and expectations of the future.

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Stages I and II are still ongoing. Stage III is potentially ahead of us. We see some of the first signs of Stage III in our latest estimates for real employee incomes:

Our latest estimates for March showed real employee income decreased by -1.05%. Now, these estimates are subject to a significant margin of error. As such, they may overestimate the extent of weakness. The last time we experienced such a significant move in our estimates was in January 2022, which we find somewhat analogous to today. Regardless of the accuracy on the magnitude, our estimates are consistent with the direction of the pressures. Extrapolating the current rate of weakness, the future path of real incomes may well be recessionary:

For now, a recession is not our expectation. But the risks have risen significantly. We write this so readers can prepare their portfolios for that potential outcome. If you would like to leverage our process for doing so, you can find what we offer linked below.

Until next time.

Before we dive into today’s note, we want to flag our latest milestone: 15,000 readers. Prometheus continues to grow and remains committed to bringing institutional-grade systematic investment strategies and research to everyday investors. To welcome you all, we’re offering a discount to new subscribers for the next year:

36% Off For New Annual Subscribers

The offer ends soon. See you on the other side.

This update will be brief. For our longer-form views on managing energy exposure, we recommend our recent note on the topic, linked below. This note will serve as an update to the same.

The case we’ve outlined for a month now has come to pass— we’ve got the speculative unwind of energy positions following a de-escalation announcement from Trump. Energy tanked as expected. We hope you’ve applied our near-constant guidance to use sizing/stops to mitigate this and have come out with strong performance.

Given this exogenous change, we need to pause and assess conditions, as we have undergone a regime shift. Fortunately, this exogenous regime shift aligns with our proprietary short-term regime signals. As a refresher:

The Prometheus Energy Program uses short-term signals to forecast the energy market in the near term. Leveraging the programs’ underlying signals, we can classify periods into Bullish, Bearish, or Neutral regimes. The objective is to identify the highest signal periods for energy markets, not every signal. These signals offer a roadmap for navigating the short-term backdrop for energy markets.

Our latest regime signals place us in a neutral energy regime, which, per the expected return profiles visualized above on the right, suggests a much less positive energy backdrop than the recent past. Of course, these signals may shift quickly, and we will keep you abreast of these changes.

Fundamentally, we remain a regime of significant oil shortage. This shortage is a strong and consistent support for the entire oil complex. However, we are currently still working through a well-telegraphed unwind of speculative positioning. There is still potential for an extremely strong energy backdrop— but we need time for markets and the economy to digest before we look to play this again.

36% Off For New Annual Subscribers

Until next time.

36% Off For New Annual Subscribers

The offer ends soon. See you on the other side.

Welcome to the ETF Program. The ETF Program is an investment program that combines active macro alpha and strict risk control, all in an easy-to-follow solution for individual investors.

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To today’s note, which we will publish in positions-only format.

Basic Trend Program

Trend following is a good solution for many investors, as it is intuitive and provides solid risk control. However, the signals used in trend following are fairly basic, so we don’t think there should be a high barrier to entry for basic trend-following strategies. As such, we will provide access to a Basic Trend Program at zero cost to users for a portfolio of Stocks, Gold, Bitcoin, and Bonds. The program uses three layers of portfolio construction: a risk-parity base, a two-speed trend overlay, and a 15% maximum volatility cap. These layers are applied versus a benchmark beta of 60% Stocks, 15% Bonds, 15% Gold, and 10% Bitcoin. We will release a methodology note soon, but in the meantime, we share the summary statistics and current positioning below:

This program currently has a 0% max long position in Stocks, a 0% max long position in Bonds, a 50% max long position in Gold, and a 0% max long position in Bitcoin.

In risk-parity terms, this translates to Stocks: 0%, Bonds: 0%, Gold: 5%, Bitcoin: 0%, and Cash: 95%. This reflects an expected volatility target of 2%.

Please note that these positions do not directly reflect the Prometheus trend measures, which are relevant to our proprietary and paid programs. The positions in our Basic Trend Program use an equal split between 1-month and 6-month trends.

While basic trend following is a strong solution for many investors, there is a world of signals and strategies beyond it. We begin to address these in the following sections.

Macro Cycle Program

Our systems aggregate a wide range of fundamental economic data to produce timely, proprietary estimates of the current stages of the macro cycle. We visualize the simulated path of using this process below:

Read more

36% Off For New Annual Subscribers

The offer ends soon. See you on the other side.

The Prometheus S&P 500 Program aims to outperform the S&P 500 over a full investment cycle. The program will strive to achieve this objective by leveraging a combination of Sector Selection, Beta Timing, Active Overlays, and Dynamic Risk Control. Our S&P 500 Program can be integrated with our Crisis Protection Program, which seeks to offer a portfolio diversifier during periods of economic and financial instability by blending active, long-only exposure to Gold, TIPS, and VIX.

Subscribe now

For context, we visualize the live returns for our Integrated Program below:

Our programs are operating in line with their long-term expectations. To today’s note, which we will publish in “positions-only” format.

Read more

Prometheus continues to grow and remains committed to bringing institutional-grade systematic investment strategies and research to everyday investors. This week, we hit another big milestone: 15,000 readers. To welcome you all, we’re offering a discount to new subscribers for the next year:

36% Off For New Annual Subscribers

The offer ends soon. See you on the other side.