This robot-driven macro fund is outperforming its peers. Here’s the good and bad news it has for markets.

And what it’s now projecting is some good and bad news. The good news is its model forecasts that inflation is right around its peak. “The important thing is that it won’t be accelerating from here,” said John Ricciardi, the lead manager of the fund and head of global asset allocation at the firm. “We think that investors are quite frightened of higher prices, more aggressive central bank tightening and elevated recession risks, and they will lessen as CPI flattens.” The bad news is the model expects output to slow, particularly near the end of the third quarter, and for corporate earnings expectations to deteriorate.

Its model is spelling more times ahead for technology. “The typical IT companies like Apple, they sell to consumers, and obviously consumers are not spending as much because of inflation and [declining] real wage growth,” said Vijay Modhvadia, managing director and head of risk. And even the tech companies selling to businesses are struggling as IT companies cut costs. The fund also is out of the energy sector, but likes healthcare and finds the telecommunications sector attractive. It finds European equities are undervalued, though there isn’t strong macro support for the fund to allocate more to the region.

The dollar, the firm says, is still undervalued even after its rally this year due to interest-rate expectations, while commodity prices will continue to fall as factory orders contract.

As for the coming Federal Reserve decision on Wednesday, the focus will be more on the commentary from the central bank than the likely decision to hike by 75 basis points. “If you look at the forward-looking indicators, including the PMIs and the announcement of many job cuts that have been happening in the tech sector, it’s all bad,” said Modhvadia.

The market

U.S. stock futures
ES00,
+1.45%

NQ00,
+1.88%
strengthened heading into the open. Oil futures
CL.1,
+1.95%
rose, the dollar
DXY,
-0.49%
fell, and the yield on the 10-year Treasury
TMUBMUSD10Y,
2.651%
edged up to 2.83%.

The buzz

There’s a light slate of earnings releases before companies ranging from Alphabet
GOOGL,
+1.84%
to Exxon Mobil
XOM,
+4.63%
report later in the week. Philips
PHG,
-1.52%
shares slumped 10% in Amsterdam after cutting sales guidance. Newmont
NEM,
-1.16%
lowered its gold production outlook.

Treasury Secretary Janet Yellen said the U.S. wasn’t in recession though she acknowledged a slowing economy.

China has been threatening the U.S. over a planned visit by House Speaker Nancy Pelosi to Taiwan.

Ukraine is still working to resume grain exports, after Russia attacked the Black Sea port of Odessa less than a day after agreeing to let shipments go through.

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