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The Macro Situation
All eyes are on the theater (and reality?) of the US debt ceiling negotiation. Even though Biden is away on international visits and despite the initial pause in talks on Friday, the White House has expressed confidence that a deal can be struck. Markets initially reacted positively before the pause and then dropped by the close of the week.
Long-term bonds have slumped because of worries about the debt ceiling default. In the meanwhile, short-term bonds—like the 1-year US bond—are killing it (better than 5%!).
Otherwise, it’s business as usual in the face of recession or even stagflation. Precious metals are still down. As we mentioned last week, historically they tend not to do well at the end of a rate hike cycle. However, they will get a boost if US default becomes more a reality.
And there’s more worries about mid-sized banks failing.
Macro-Dependent Tickers
- Short-term US Bonds
Stock Watch
And then there was AI. The main AI stocks continue to climb, and this week we’re adding Nvidia to the watch list as there have been positive sentiment about the development of its AI tools.
The microchip sector has been hit by oversupply issues, but as competitors shutter their doors, those that remain will most likely reap the benefits. Nvidia, AMD, and Micron Technologies look to capitalize on the survivors market thanks to ongoing efforts of each to expand into AI research—including claims about having "reinvented computing"!
Stock Tickers to follow:
AI:
- Microsoft (MSFT)
- Alphabet (GOOG)
- Meta (META)
- Amazon (AMZN)
- Nvidia (NVDA)
- Micron Technologies (MU)
- Advanced Micro Devices (AMD)
Crypto Watch
XRP has jumped thanks to positive news in the SEC case. The judge has allowed a crucial speech from former SEC director William Hinman to remain open as opposed to sealed. The speech arguably sets a precedent as Hinman stated Ethereum was not a security.
AI projects will follow the relative sector trends. We reported in April that Render (RNDR) was bucking the trend of a tight crypto market. It still remains one of the persistent coins with steady gains.
As the crypto markets trend down due to low liquidity, even Bitcoin will be hit. The Bank Safety narrative is weakening. The US dollar index is back above 103; and as things decline, any potential for a hedge against the dollar is therefore solely focused on Bitcoin, as opposed to Ethereum also. But anything can happen with recession looming and, of course, the possibility of a US default. Whatever the case, Bitcoin now has enough institutional investment that it will track significant macro turns and events.
Crypto Narratives:
- Bank Safety: BTC
- SEC v. XRP
- “AI” Narrative: FET, RLC, GAI, RNDR
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This newsletter was created by The Art of the Bubble/1.2 Labs and is provided for educational and entertainment purposes only. You should expect no financial returns one way or another based on the statements contained herein.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.
