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The Macro Situation

Reddit (noun):

• a social media news site;

• slang phrase for “I read it”.

(adj):

• when the economy appears to be going as planned.

― New Entry in the Updated Devil’s Dictionary

The big news this week is that the Fed announced nothing really has changed with the inflation narrative (reddit!). The target rate is still 2%, as predicted, and the road getting there has been bumpy. 

Three 25bps rate cuts are still on the table for 2024. A majority of the economists polled (66.7%) believe the first rate cut will be in June.

The history of the Federal Funds Rate (FFR) supports this narrative. The FFR is the rate which the Fed sets and which guides how much commercial banks charge each other for loans. Higher costs of borrowing are therefore a form of quantitative tightening.

History shows that the FFR gets slashed during times of recession (i.e. early 1980s, 2000, 2008). We’re not in a recession, of course. But historically, we’re at a comparable high point in the FFR where the next phase would most likely be downward.

As of March 15, 2004, the ANFCI has indicated a more risk-friendly economic environment, having increased from -0.51 to -0.53.

Core Assets Update

Gold (2166.50) spiked Thursday on the interest rate news, but slumped on Friday due to a surging US dollar (104.43).

Crude Oil (80.82) fell at the end of the week despite the good news from the Fed. A weakening Chinese economy is to blame.

10-year Treasury yields (4.202%) dipped (their price inversely went up) due to a bit of certainty being injected into the interest rate cuts narrative.

- Todd Mei, PhD & Sebastian Purcell, 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" series 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, Michelle Milan

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DISCLAIMERS

This newsletter is provided for educational and entertainment purposes only. 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.

You should expect no financial returns one way or another based on the statements contained herein. These points hold equally for any statements that could be attributed to The Art of The Bubble, 1.2 Labs, or any related business entities or personnel operating in association with Robin Technologies and Analytics LLC. If you decide to buy or invest in anything, then your returns and potential losses are your own. No statements about taxation are taxable advice and you are encouraged to consult your own tax professional. No statements about laws are legal advice and you are encouraged to consult your own professional legal counsel. You are finally also encouraged to do your own due diligence before investing in anything consulting with appropriate professionals as needed.

Benchmarks and Data Sources

All data not otherwise specified (or obvious from context) is taken from TradingView.com.

The cryptocurrency benchmark used is an equally weighted mix of BTC and ETH. While the benchmark for stocks used is the Nasdaq 100.

Conflicts of Interest

All contributors to this newsletter should be considered active investors. Because the strategies pursued are often quick, contributors may or may not own the stocks or coins discussed by the time of reading. However, readers should assume that any coins, stocks, or other items discussed are owned by the contributors for conflict of interest purposes.

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