Market Strategy Prompts: Synthesizing an Equity Market Outlook
AI generated Beta test version
Last updated: 17 September 2025
Objective:
Synthesize implications across the recent trends in a broad, economy-wide representative set of macroeconomic indicators, geopolitical and fiscal trends, with market related indicators (rates, liquidity, spreads, earnings, valuations, prices and volatility) to generate balanced outlook scenarios for the equity market over a 3-month horizon.
Explanation:
Market commentary often falls into one of two traps: it either buries the reader in a flood of raw data without clear implications, or it leaps straight to bold forecasts without showing the evidence. What actually helps investors navigate the next few months, and also challenges any preconceptions they might have, is a disciplined synthesis of macroeconomic signals and market indicators - a structured way of asking, what story is the hard and soft data in totality really telling us?
This style of analysis starts by laying out the building blocks: growth, inflation, labor markets, consumer and business sentiment, production and geopolitics. It then links these fundamentals to the plumbing of markets — interest rates, yield curves, credit spreads, earnings revisions, valuations and price and volatility trends. Instead of treating each dataset in isolation, it asks how they interact: Does a weakening labor market soften inflation pressure but undermine consumer spending? Does a steepening yield curve reflect policy easing or rising long-term risk premia? Are equity valuations assuming resilience even as surveys and credit begin to turn down?
The value of this integrated approach is twofold. First, it helps identify when the market’s pricing diverges from the macro trajectory - signaling either opportunity or risk. Second, it forces transparency: readers can see each data series, the forward expectations, and how they roll up into a three-month outlook with probabilities, not just a single “call.”
In what follows, we’ll walk through exactly that process. Use this prompt set to review the latest country specific macro data, track financial conditions, assess earnings trends, and then stitch these inputs together into a clear short-term equity market outlook. The goal isn’t to predict with certainty - it’s to provide a coherent framework so investors can create their own analysis to help understand what’s priced in, what’s shifting, and where the risks and opportunities really lie.
Link to blog post explanation:
Using AI to Construct Market Scenarios
Preferred Model(s):
Dual model technique recommended. Gemini 2.5+ and ChatGPT-5+ with Chain-of-Verification (CoVe) follow up in each. See execution notes
Important Execution Notes:
The prompt requires the user to upload an extensive dataset of weekly closing prices for the main country index being examined (e.g. S&P 500 index). I use 25 years of weekly closes to ensure it covers market cycles.
Customize the prompt for the country (currently set for the US).
As this style of analysis calls for an outlook to be created, there is wide latitude for the Gen AI model to make conclusions across a broad range of potential outcomes. We wish to ensure those conclusions are well reasoned, anchored in objective data and proper weighting is applied to each step through the analysis to the synthesized conclusion. For this we use a 2 model technique with Chain-of-Verification follow up steps to interrogate the analysis.
The primary prompt is run through BOTH Gemini and ChatGPT to elicit initial responses from each model.
Add CoVe steps: Each model is then asked to generate a list of questions to assess the quality and depth of the response and the internal consistency of the conclusions drawn.
The investor should also append any questions of their own to clarify the analysis or implications drawn in the various steps, to the list of verification questions. This can include additional considerations that spring from the analysis or clarifications of data or analysis that appears unusual.
Each model is then asked to answer those combined questions, and on the basis of that, update its scenarios and conclusions as to the market outlook.
The use of two models allows the investor to bring considerations that seem pertinent to the attention of the other model and vice versa or challenge reasoning the model appears to be using in a step.
Don’t be surprised to potentially see one model gradually change its views and conclusions via the verification steps. This is desirable as it is strengthening the reasoning, conclusions and confidence the investor can hold in the combined output. It is not uncommon to see one model hold its line through the verification while the other, starting from an alternative point of view gradually shifts via interrogation close to the other view. This shift is valuable information in itself.
Quantitative conclusions and even directionality can differ between models at the conclusion but this offers another valuable viewpoint. The models should essentially provide the same data and calculate the same trends - the differences will lie in the reasoned interpretations.
The investor should isolate what interpretations both models agree on and where they differ. Then look for why those reasonings differ (eg weighting of different datasets in the conclusion), weighting of hard data vs soft data or current trend versus a more forward looking (& risky) prediction. The investor can then make their own informed conclusion where they sit in this range.
Sample Output:
Copy/Paste Prompt Set:
Important note: Subscribers can use this prompt set for their own analysis. However, the prompt is copyrighted by The Inferential Investor, paywalled, and must not be shared without permission.
(1) Primary Prompt for each of the dual models:
You are a senior market strategist making an assessment of the market risk regime and outlook for the equity market. Follow the steps outlined below to analyze the current risk profile of the [US] equity market and make an assessment of the outlook over the next 3 months for the stock market based on a balanced assessment of data across categories of macroeconomics, interest rates, monetary plumbing and credit, earnings trends and prices and volatility. Undertake the analysis step by step and generate narrative insights from each data set to build to a comprehensive view on the equity market outlook based on a balance of probabilities. Assess the macroeconomic trends and narrative implications first, the monetary and markets (interest rate, credit, liquidity and earnings) related data second, followed by analysis of pricing data in sequential steps as follows:
1. Macroeconomic Indicator Analysis
For each indicator below, present:
- Recent progression / latest data trend ensuring any recent data from the last 2-4 weeks is also captured
- Forward expectations (next 3–6 months)
- Implications for economy and equity markets
- Provide charts, tables and data visualizations where possible
Indicators to cover (expand with others as relevant where news coverage indicates new considerations have recently arisen in the last month):
- GDP growth and leading economic activity indicators incl GDP Nowcasts
- Inflation trends (headline CPI, core CPI, PCE deflator, PPI)
- Consumer spending trends (advance retail sales, redbook index, personal consumption expenditures)
- Labor market indicators (unemployment rate, payrolls, initial and continuing claims, ADP payrolls, wage growth, personal disposable income and savings rate, participation rate)
- Geopolitical developments (domestic and international incl taxes, trade, regulations, conflict and government funding)
- Trends in fiscal spending, the outlook for fiscal and deficit as % of GDP compared with prior periods
- Consumer sentiment and spending trends
- Business investment and ISM surveys (capital investment and durable goods purchases by businesses, manufacturing & services. Call out strong and weak investment sectors.)
- Industrial production and manufacturing indicators
- Housing market conditions
- Commodity prices (energy, industrial metals, agriculture) and their pass-through effects
2. Interest Rate & Yield Curve Analysis
- Summarize Federal Reserve policy stance and interest rate expectations (from Fed communications, futures pricing, and market consensus).
- Show yield curve dynamics (short vs long maturities, steepening/flattening/inversion trends).
- Assess how these changes influence liquidity, discount rates, and equity valuations.
3. Monetary Plumbing and Liquidity trends
- Summarize recent changes in the [Treasury General Account], reserves, money supply, Repo facility.
- Assess how these changes influence liquidity, money flows into risk assets, risk and equity valuations.
4. Credit Spreads
- Summarize recent movements in corporate credit spreads (investment grade, high yield).
- Highlight what both the level and recent change in spreads signal about economic risk, credit conditions, and equity market stress.
5. Corporate Earnings Trends
- Show aggregate S&P 500 earnings growth (recent quarters and last 1 and 3 month earnings revisions).
- Where possible decompose earnings growth expectations into revenue and margin contributions
- Summarize analyst expectations for the next 12 months versus longer-term trend.
- Interpret the implications for equity valuations and sector leadership vs laggards.
6. Valuation Analysis
- Present the market P/E ratio relative to history (last 5, 10, 20 years).
- Discuss whether current valuations are expensive, fair, or cheap given interest rates, growth acceleration or deceleration, earnings trends, and inflation expectations.
-Incorporate other metrics (e.g., equity risk premium, CAPE, forward P/E).
7. Prices and volatility analysis
- Analyze the attached file of weekly prices for the [S&P 500 index] over the last [25] years for trends and patterns and correlate with macro conditions.
- Calculate rolling volatility estimates and add those to the analysis or use the VIX index as a proxy.
8. Implications by Data Series
- For each of the above sections, after describing data trends and expectations, include a short paragraph on its specific implications for the economic outlook and its relationship to the equity market (positive, neutral, negative)
9. Integrated Market Outlook
- Bring all data series together into a synthesized analysis as follows:
- Provide a table with each category of data and a rating based on its influence on the equity outlook (negative to neutral to positive) and a one line explanation
- Next synthesize all the categories into a single conclusion on the market. Ensure you take into account economy/GDP weightings of economic sectors and their data proxies in this.
- State expected equity market direction over the next three months (up, down, sideways).
- Specify magnitude (small = ±0–3%, medium = ±3–7%, large = ±7%+).
- Provide a confidence level (0–100) based on alignment/divergence of indicators.
- Indicate the primary factors and drivers in this conclusion from all the indicators and data analyzed.
- Highlight key risks and upside/downside scenarios that could shift the outlook and indicate probability weightings based on the analysis of data undertaken.
10. Conclusion:
- Summarize in plain language how the combination of macro, liquidity, credit, geopolitical, earnings, and valuation and price/volatility trends shape the market outlook.
- End with a clear statement of baseline expectations and the conditions that would warrant a reassessment.
Output Instructions:
- Structure the report with headings and subheadings.
- Finish with a bullet point executive summary and written conclusion that ties everything together.
- Present the final text in a format suitable for download as a PDF report.
(2) Chain of Verification Questions
Create a list of verification questions based on both the original query and the initial response to test the quality and depth of the response and the internal consistency and integrity of the conclusion for the [US] equity market outlook. A list of questions will be generated by the model to check data, sources and logic. Examine these and see if others come to mind before proceeding.
(3) Chain of Verification Interrogation
Answer these questions with a focus on quality and depth of responses and consideration of their influences on forward earnings and the equity market outlook. [Add the following further questions:]
[ADD USER QUESTIONS]The investor can continue to ask questions and challenge the conclusions in a chain of thought prompt conversation until satisfied that the analysis is comprehensive.
Examples:
“Is it realistic to assume that the identified slowdown in the economy will result in material negative earnings revision within the 3 month time horizon of this analysis?”
“Your summary list of macroeconomic indicators and implications indicates most are neutral to negative. How do you synthesize that with the equity market’s current expectations for double digit earnings growth?
(4) Update Conclusions
Update the market outlook assessment, scenarios, probability weightings and conclusions based on the answers to these questions.
Re-present the updated report in a downloadable format.