The 9-Step Causal Cascade
Our institutional framework evaluates market conditions by tracing the flow of capital from systemic liquidity through rates and credit, finally reaching equity valuations. In the current Restrictive Regime, we observe a breakdown at Step 5 (Credit Spreads), creating a bottleneck for growth assets.
Risk Index Components
Falsification Protocol
"We are currently bearish on duration-heavy assets. This thesis is invalidated if 10Y Real Yields drop below 1.25% or if S&P 500 breadth expands beyond 70%."
Immediate Invalidation Triggers
- • Fed Repo Facility (RRP) balance increases >$100B
- • High-Yield Spreads tighten below 320bps
- • M2 Growth inflects positive for 3 consecutive months