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The Macro Situation

euphobia (noun):

• literally from the ancient Greek, good-fear;

• that niggling fear at the back of the mind that something might not be quite right even though all things look above board.

― New Entry in the Updated Devil’s Dictionary

Who’s afraid of a record-setting Q1 for the markets? 

• The S&P 500 had the best first quarter since 2019 while the three major indices as a whole have had five consecutive months of gains.

• The Q4 GDP was revised for a final time, showing an increase of 0.2% (3.4%).

• Orders for durable goods (vehicles, appliances, furniture) rose 1.4% in February.

• The U.S. added 275,000 jobs in February.

• Consumer confidence remains sideways, with a slight optimism that inflation will go down.

And yet, euphobia might not go away. 

• The core PCE price index rating for January was revised up. The revision means that the six-month annualized rate sits at 2.9%, the highest since July 2023.

As we noted in our Newsletter on February 18th, there is not much room for core inflation to come down, especially given the housing market and global constraints relating to conflict.

As of March 22, 2024, the ANFCI has become even more “risk friendly,” increasing from -0.51 last week to -0.57.

Everyone likes a happy ending. Sequels, however, are a different story. Stay tuned.

Core Assets Update

Gold (2245.90) is riding the wake of the strong economy, with central banks buying a near-record level of gold in 2023. 

Crude Oil (83.07) is warming up with the Spring thaw, having reached its highest price YTD. This means that firms far on the "price sensitivity curve," such as $RIG, have some cushion for growth.

10-year Treasury yields (4.206%) experienced a bit of a rocky ride this past week. They were as high as 4.273% on Tuesday and as low as 4.1820% on Wednesday. A jump in yields (and an inverse drop in price) at the close of a short trading week indicates some uncertainty, or possibly even some euphobia, over the long-term picture.

- Todd Mei, PhD & Sebastian Purcell, PhD

AI Sentiment Report

The following sentiment scores use AI 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, 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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