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The Macro Situation
E ticket (noun):
- a type of admission ticket Disney used to have for the more exciting rides;
- an exhilarating experience;
- the US dollar index when interest rates are uncertain.
― New Entry in the Updated Devil’s Dictionary
Exciting times?
Consumers think so. This week’s consumer confidence report from the University of Michigan reported a 13% boost in January, its highest reading since July 2021.
Investors think so. The S&P 500 rose 1.2% and closed at a record-high 4,839.
The US dollar index (103.24) also hit its highest in one month as clarity about the first interest rate cut becomes uncertain. Meanwhile, the number of Americans claiming unemployment (187,000) sank to its lowest in one year.
The number of economists who think rates will drop in March has decreased to 46.2% from 76.9% last week.
Markets reacted at the beginning of the week by pricing in the lack of clarity about interest rates. Even though tech stocks led a record-breaking, end-of-the-week rally on the back of semiconductors, markets will no doubt have to deal with the fact that “good news about the economy” is “bad news for monetary policy”.
Crude Oil (73.71) remains down. Although there are escalating tensions between the US and Houthi Rebels, a revised oil production forecast by the International Energy Agency signals less anticipated demand. Although it projects growth for 2024, its numbers are lower than OPEC+’s forecast.
Gold (2031.80) is facing downward pressure with the strengthening US dollar and rate cut turmoil. Long-term treasury yields followed suit, with the 10-year yields reaching a one-month high, closing at 4.13%.
- Todd Mei, PhD
AI Sentiment Report
The following sentiment scores use ChatGPT as part of the AI tech stack to track sectors as leading indicators. (Lesson 4 of The Art of The Bubble covers the selection of lead indicators for bubble trades). The scores are most indicative for the next day of trading (a Monday), but they appear to set the general tone for the next week.
The methodology employed is based on this peer reviewed academic article, which produced 550%+ results in back tests over a 2 year time frame. We consider 4 and 5 scores to be positive, but please bear in mind that the AI model is still in its validation phase.
-The Research Team:
Dom Viera, Samantha Russell, Nicole Zinuhova, Aiza Malik
Free Stuff!
We'll be delivering ETH to winners this week over Discord and announcing our next round of promotionals.
Happy Trading!!
-The Team
The 1.2 Labs Edge
Our paid plans make use of the same base algorithm that our hedge fund, 1.2 Capital Management does, but modified in timeframe so you don’t have to stare at your screen all day.
Below are two of our data service offerings for stocks (figure updated quarterly).
This newsletter is provided for educational and entertainment purposes only and should not be relied upon for business, investment, taxation, or legal advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by 1.2 Capital Management. (An offering to invest in a 1.2 Capital Management fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation--all of which should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by 1.2 Capital Management, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
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