State of the Market (05/12/24)

By Todd Mei PhD | State of the Market | 12 May 2024


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The Macro Situation

white noise (noun):

a mixture of sounds used to mask disruptive noises in the environment;

  • a way of coping with a partner who snores;

  • believing in the clamor about tech and AI to drown out the Fed.


― New Entry in the Updated Devil’s Dictionary

Markets were emboldened this past week. Tech stocks linked to AI, such as TSM, have led the way while the jobs market has taken a back seat with indications it is cooling.

The week ending May 4th saw weekly unemployment claims rise to 231,000 compared to 209,000 in the previous week. To give some perspective, it’s the most unemployment claims since August 2023.

But it will take more than one or two weeks of unemployment increases to move the Fed and its long-term stance. The CME FedWatch tool, which tracks the prices of various futures contracts related to interest rates (particularly the federal funds rate), remains unmoved compared to previous weeks. 

September is expected to be the earliest month for a rate reduction, which currently has a 48.6% probability of occurring.

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Up to the week ending on May 3, 2024, the ANFCI remains level at -0.52, which represents a generally risk-friendly investment climate.

Core Assets Update

Gold (2366.90) rose on the back of the unemployment data and a potentially weakening US dollar (105.31).

Crude Oil (78.20) rose towards the end of the week due to expectations that OPEC+ will reduce oil supply. However, the gains were short-lived as fears about high rates for longer caused some price adjustments.

The 10-year Treasury yield (4.50%) was a bit of a rollercoaster this past week. Before Thursday, yields were climbing but fell steeply following 1) the unemployment numbers and 2) news that the US Treasury sold $25B in 30-year bonds. And then, the 10-year closed the week higher as investors mulled over the drop in consumer sentiment, which is at a 6-month low.

- 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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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.

Company policy prevents accepting any funds for the discussion of specific coins or stocks.

By opening and reading this newsletter you agree to further the terms and conditions set forth for 1.2 Labs educational services and data services. Read those terms and conditions here.

 

 

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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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