State of the Market (05/05/24)

By Todd Mei PhD | State of the Market | 5 May 2024

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The Macro Situation

Pyrrhic victory (noun):

  • a victory that involves such great costs that its outcome is not worth the losses;

  • a description of life in view of the 2nd law of thermodynamics (i.e. entropy);

  • in economics, the need for downturns and recessions to cure the economy.

― New Entry in the Updated Devil’s Dictionary

Markets triumphed this past week. A victory built on two factors: 

  • the Fed remarked that it does not intend to raise rates; and

  • recent job data for April indicates a cooling labor market – the unemployment rate increased 0.1% while only 172,000 jobs were added compared to March’s 303,000. 

  • The slight uptick in unemployment did bring the Sahm Rule indicator to 0.37 (from 0.3), but the indicator only predicts a recession at higher than 0.5. We are still in “goldilocks” territory then.

But it could be considered a Pyrrhic victory:

  • It was only several months ago that we were wondering if March would entail the first rate cut.

  • A softening jobs market may help inflation, but it’s hurting those seeking employment.

The past two weeks have challenged market participants who had built a 2024 thesis around strong rate cuts. Presently, 48.7% of market participants think a first rate cut will happen in September. In general, this delay in rate cuts indicates a belief in the underlying strength of the US economy.

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Up to the week ending on April 26, 2024, the ANFCI has indicated a slightly less risk-friendly environment as it moved from -0.52 the previous week to -0.51. Though this indicator is still a long way from restrictive territory.

Core Assets Update

Gold (2309.90) remains beholden to a strong US dollar (105.08).

Crude Oil (77.99) dropped significantly due to rising inventories and speculation that the Israel-Hamas conflict may end soon, thus quelling worries over supply line disruptions.

The 10-year Treasury yield (4.497%) fell (as its price rose) due to indications that the economy is slowing down and the renewed prospect of interest rate cuts on the horizon.

- 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.

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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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Benchmarks and Data Sources

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

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

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Todd Mei PhD
Todd Mei PhD

Todd is a former Associate Professor of Philosophy with over 16 years of research experience in the philosophy of work and economics. He is currently the lead researcher and writer for the Web3 consultancy group, 1.2 Labs.

State of the Market
State of the Market

Weekly reports on the state of the macroeconomy, stocks, and crypto compiled by the 1.2 Labs Research team.

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