A Two-Part Framework to Explain Equity Performance

Analysis that combines inflation and growth cycle trends may provide a more nuanced way to understand stock market drivers.

Portfolio consultants Mark Cintolo and Sean Kaukas introduce a new framework for understanding equity market performance based on inflation and the economic growth cycle.
  • The framework uses the two dimensions of inflation and cyclicality to describe four economic regimes.
  • The four quadrants each align with industry sectors that tend to do well in that scenario.
  • The framework uses the historical risk-adjusted returns for all S&P 1500® industries during unexpectedly high and low inflation regimes and unexpectedly high and low growth regimes to assign an inflation and a growth score to each industry.
  • The consultants review these regimes and a range of charts to provide insight related to equity positioning for an evolving inflationary environment and various landing scenarios.