Inflation Views
Disinflationary Pressures Ahead
Welcome to Prometheus Asset Allocation. The Prometheus Asset Allocation program offers a stable, macro-focused approach to asset management. Prometheus Asset Allocation aims to outperform a traditional stock and bond portfolio by leveraging our proprietary systematic macro process to rotate between 3 ETFs monthly (plus cash). As part of the program, we will be sharing our views on Growth, Inflation, and Liquidity in addition to our monthly video updates.
If you’re unfamiliar with our mechanical understanding of evaluating inflationary pressures, we highly recommend reading our Macro Mechanics. This provides the principles that guide the construction of our systematic investment strategies & our research process:
Understanding Inflation
The best information we can ever provide investors is the mechanics of how we think about macro conditions over time rather than what we think about them at any particular time.
In today’s note, we dive deep into our inflation views. Our primary takeaways are as follows:
The latest CPI data surprised consensus expectations and drove an acceleration in the three-month inflation trend.
This print was dominated by services sector inflation, particularly motor vehicle insurance. However, inflationary pressures have begun to fade meaningfully by looking at the sources of inflationary potential in the form of weak nominal spending for both real estate and transport.