Deteriorating General Conditions

This week's scoring of our recently-revised -- increased our featured data points to 68 from 43 -- PWA Index shows a marked deterioration in overall general conditions.

Here's the succinct assessment produced by our proprietary analytical engine:

MACRO ASSESSMENT

The index crossed into negative territory for the first time since early 2023. The deterioration is not broad-based — it is concentrated and structural. The inflation section (0 green, 10 red) and financial markets section (0 green, 3 red) are the primary drivers. Consumer and business sections are holding but showing early signs of stress. The stagflationary setup is now confirmed across multiple independent measures simultaneously — rising pipeline inflation, decelerating real growth, defensive market rotation, and a consumer running on leverage rather than income. 

In a nutshell, despite our index moving into the red, we're not interpreting this as a 2026 recession call at this juncture... I.e., per the above, the deterioration for now is concentrated, although structural... Which, in terms of the inflation signals (structural in our view), ultimately plays well for a not-small slice of our core positioning... Recall that our allocation leverages our structural weak-dollar thesis.

The relative consumer and business strength -- early signs of stress notwithstanding -- despite the heightened inflation risk (a potential late-2026 issue even if we assume a near-term Middle East resolution) -- with all of the fiscal support to come reads bullish... This, however, requires that the Iran War -- and the Strait of Hormuz closure -- does not morph into a long-term affair.

Stay tuned...

Happy Easter!