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The Macro Situation

no landing (noun):

• what conspiracy theorists believe happened on the moon;

• the state of the economy when 3.5% becomes the new inflation target.

― New Entry in the Updated Devil’s Dictionary

What’s keeping the economy in hover mode and well above the targeted 2% inflation rate?

Consumer demand is still up.

• Retail sales (not including cars, building materials, and gas) increased 1.1% during March. 

• The Atlanta Fed has now projected Q1 growth to be 2.8%, up from 2.4%.

Combine the strong economy with the Israel - Iran conflict and what you get are rather unhappy market conditions. There’s a worry the US involvement in military conflict will put a further strain on its debt capacity, while investors and experts wonder whether there will be any rate cuts for this year. Investors, according to the CME Fed watch tool, are now pricing in a first rate cut in September, with 59.3% holding that it will not happen in June.

Up to April 12, 2024, the ANFCI has indicated a risk-friendly environment as it remained level at -0.55. April 19th data to be released this Wednesday (the 24th). Thus far, delays in rate cuts have not translated into materially tighter financial conditions.

Core Assets Update

Gold (2406.70) has seen slow yet steady gains as investors–especially in China–hedge against geopolitical uncertainty. These wins are remarkable, given the headwinds this bullion faces with a strong US dollar (106.12).

Crude Oil (83.24). To spike or not to spike? So far, not to spike. Israel has shown more restraint than expected, and traders are reportedly unwinding “the war premium” on oil.

The 2-year Treasury yield briefly topped 5% at midweek after J Powell’s comments about the lack of progress against inflation. The 10-year Treasury (4.621%) might be a candidate for the same if experts are correct that many investors have been sluggish to sell, believing that the Fed will have to cut rates soon. But we know that narrative is under great pressure.

- 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.

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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

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