Run It Hot, Yet Again

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Hi nice people, this is Alf.Sorry I disappeared from Substack for a good while but markets are crazy, the fund is growing nicely and it’s a huge amount of work.But no worries - I am back with a healthy dose of macro analysis for you.As an exception to the norm and to gain back brownie points with you guys, I am sharing the latest research piece reserved to the investors and The Macro Compass subscribers.Here it goes!Forward-looking indicators suggest the US nominal growth cycle is picking up pace again. The inflation-adjusted primary US fiscal spending is higher than in 2024-2025 at this point of the year:Global real-economy money printing is also growing at a strong pace, similar to 2025.As a reminder, inflationary money is printed by governments (deficits) and via credit creation (banks, shadow banks etc). Concerted G20 fiscal deficits and the debt-funded AI capex cycle are the main contributors to the strong pace of global money printing in 2026:Leading indicators also suggest the US labor market has found a bottom.The NY Fed probability of finding a job in the next 3 months (orange) has stabilized and the weekly ADP job creation series (blue) has moved from -50k in June 2025 to +42k today.As a reminder, with the US labor force growth (e.g. supply side of labor market) estimated to be close to zero it doesn’t take much demand for labor to kickstart a virtuous cycle in the US job market:A virtuous cycle in the US job market won’t necessarily mean runaway inflation, at least in the short term. While a tighter job market will heat up wages, the starting point for US wage gr…