How To Macro (Part 1)
How I Build a Framework Before I Build a View
Macro can look intimidating because everything appears to matter at once: inflation, employment, central banks, bond yields, currencies, credit spreads, fiscal policy, oil, geopolitics, liquidity, and positioning. The mistake is to treat these as separate headlines. I try to treat them as pieces of one mosaic.
Se the above 5 part series working through various stages of mosaic/informational edge development.
That word, mosaic, is important. In investment research, mosaic theory is the idea that an analyst can combine many lawful pieces of information, public information and non-material observations, to form a larger conclusion. The individual tiles may not mean much on their own, but the picture becomes clearer when they fit together. I apply the same idea to macro. I am not looking for a secret. I am trying to assemble enough ordinary evidence to understand the regime before it becomes obvious.
This distinction matters because an informational edge does not have to be an access edge. In fact, I prefer edges that are legal, repeatable, and process-driven. I do not want to rely on one source, one data point, or one heroic forecast. I want to stack small pieces of evidence until the probability distribution starts to tilt.
My starting point is always the policy problem. What is the system trying to solve? Is the dominant issue inflation, unemployment, credit stress, currency credibility, fiscal sustainability, or financial stability? Each problem creates a different reaction function. If inflation is the problem, policymakers usually try to tighten financial conditions. If financial stability is the problem, they may ease even when inflation is uncomfortable. If currency credibility is the problem, they may tighten into weakness.
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