The Macro Situation
The buzzword since Wednesday’s Fed meeting is “disinflation”, which technically means that prices are rising at a slower pace.
With February’s 25bps increase, J Powell believes that a reduction in inflation will occur “without a really significant economic decline or a significant increase in unemployment” because the current condition is a result of “very strong demand and hard supply constraints”. Friday’s jobs report numbers, where the unemployment rate was at its lowest since 1969 (!), will test the Fed’s hypothesis. Look for markets to feel their way around the tension between the slight optimism in the Fed’s outlook and conflicting economic data.
What we can expect is that “Longer term, it [the jobs numbers] strengthens the possibility of a ‘soft landing.’ Shorter term, this might kill the rally as 50bps more of hikes are now certain. Maybe 75bps.”
Stock Watch
Stock Tickers to follow:
- Macro-Dependent: US Treasuries (IEI, IEF, TLT)
- Green Energy: TSLA
- Tech: GOOG, MSFT
The US Dollar index rose just above 102, with Gold (GLD) experiencing a drop after the jobs report. Crude oil slid significantly from last week after expectations that demand will fall, likely due to recessionary conditions.
TSLA continues its rise due to price reduction and high demand expectations, but it's questionable as to whether the current conditions will allow for a sustained increase.
With the macroeconomic once again made uncertain by unexpected jobs numbers, mid- to long-term bonds are worth watching. Their future performance depends on how significant an expected recession might be. The hope is that despite any yield curve indications, there will be a quicker pivot to cutting rates.With the upswing in interest and investment in AI thanks to ChatGPT, Google and Microsoft appear to be undervalued as they develop their own AI platforms and reduce staffing costs.
Paying subscribers will continue to get weekly updates on these plays. The Bubble Portfolio last year made just shy of 13% and beat its benchmark by nearly 40%. This year, it had investments in RIG at the $4 range, now up more than 50%.
Crypto Watch
Crypto Tickers to follow:
- The Benchmark: BTC, ETH
- ALT Coins: ATOM, AVAX, MATIC, APT, QNT
- Network Coins: BNB, OKB, CRO
- DeFi Exchanges: GMX, GNS, GLP, MLP
Gainers from last week’s report continue to do well in this environment: MATIC, AVAX, APTOS, QNT.
Cosmos (ATOM) is full of activity. Osmosis (a Cosmos DEX) has been upgraded to make cross-chain transactions more efficient and secure. The upgrade, which occurred on January 23, will allow protocols on Cosmos to have more options with respect to liquidity concentration. In mid-January, Quasar was successful in raising $5.4M from Shima Capital in order to create structured investment products.
The DeFi spot exchange protocol GMX is back on the rise after experiencing a dip at the end of 2022. It’s riding the current rally where users can leverage up to 50x on the likes of BTC, ETH, and AVAX.
As a reminder, our Dynamic Crypto Portfolio beat the benchmark by better than 60% last year and beat the “smart money” in the crypto space (as reported by Messari data) by roughly 76%.
-Todd Mei, PhD
If you found this helpful, Subscribe to The Art of the Bubble’s free newsletter.
Join us on Discord for live chat and daily updates.
This newsletter was created by The Art of the Bubble/1.2 Labs and is provided for educational and entertainment purposes only. You should expect no financial returns one way or another based on the statements contained herein.Robin Technologies and Analytics LLC is the firm that distributes The Art of The Bubble products. The firm does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments; nor is Robin Technologies and Analytics LLC registered as an investment adviser or broker-dealer in any jurisdiction.
