Our Mission

Valo Macro is a research firm focused on understanding how the structure of financial markets shapes risk, capital flows, and investment outcomes.

 

It is famously said in physics that “more is different”. The behavior of an individual component cannot be understood in isolation from the system it inhabits. Financial markets exhibit the same property: the behavior of an asset emerges from the system it is embedded in. Understanding markets therefore requires studying not only individual securities or macroeconomic indicators, but the structure of relationships through which capital flows and market dynamics propagate.

 

Our work examines these relationships through the mechanics of the financial system itself. We study how capital is raised and committed, how balance sheets support investment, and how contracts distribute obligations, income, and risk. These arrangements influence what can be financed, how production develops, and where the consequences fall when expectations are not met.

 

Our current research applies this approach to artificial intelligence. Advances in computing depend on a wider system of infrastructure, financing, commercial commitments, and demand for AI services. A company’s expansion may depend on another’s promise to purchase capacity, a third party’s willingness to stand behind that promise, and the eventual income generated by services delivered to users. We study these connections to understand how technological progress becomes economic activity, how participants are paid, and where constraints are developing.

 

Many of these conditions are only partially observable. We approach their measurement as a latent state problem: inferring the underlying state of the system from the evidence it leaves behind. The terms on which capacity is financed and sold, the commitments carried across balance sheets, and the relationship between productive output and cash income each reveal something about that state. Examining them together helps us understand the conditions supporting expansion and the dependencies on which its continuation rests.

 

Rather than attempting to predict individual events, Valo Macro focuses on diagnosing the structural conditions that govern how markets behave. We aim to give investors and advisors a firmer basis for judgment.