How to Forecast GDP Like a Hedge Fund (Without Being One)

Atlas Analytics’ Weekly Subscriber Update

Every investor is trying to answer the same question: where is the economy headed, and how much longer can markets keep running ahead of it? Hedge funds spend millions of dollars to gain an informational edge, in part, by scraping satellite imagery, building econometric models, and stress testing every signal.

At Atlas Analytics, we’ve built similar tools, but we share the results openly with you. By looking at Core GDP, a refined measure of the economy’s underlying strength, we can see when markets are aligned with fundamentals and when they’re sprinting ahead of them.

Right now, Mr. Market is still flying down the mountain, but this time, it’s moving even faster than Core GDP can support him.

Key Takeaway

Markets are stretching further than fundamentals suggest. ETF valuations remain well above their GDP-based anchors, but when measured against Core GDP, they look more reasonable. That said, valuations have now moved above Atlas Analytics’ Core GDP target, what I call “over their skis.” This doesn’t mean an immediate correction is inevitable, but it does suggest we’re entering more fragile territory.