Introduction
The free ebook Master the Market by Keith McCullough presents HedgEye’s model for characterizing the current macroeconomic regime. HedgEye calls their model “GIP” and classifies the regime in one of four quadrants based on Growth (GDP) and Inflation (CPI), which in turn anticipates a monetary Policy response. The GIP model builds on the GI matrix popularized by Ray Dalio (see here and here). The innovation of the GIP model is in using the “second derivative” of the reported GDP or CPI reading.
This article describes how to use Python to calculate this “second derivative” to identify to the current regime.