State of the Market (05/26/24)

By Todd Mei PhD | State of the Market | 26 May 2024


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The Macro Situation

 

bracket (verb)

  • to place text, words, or phrases into brackets, usually in order to clarify or explain the main text;

  • in a branch of philosophy called phenomenology, to suspend judgment about a concept or idea by temporarily disregarding it;

  • in finance, to ignore persistent macroeconomic data because some aspect of the market is doing well.

                                                   ― New Entry in the Updated Devil’s Dictionary

Who cares about sticky inflation as long as the markets are surging on the back of tech giants like Nvidia (NVDA)?

Jamie Dimon for one. The CEO of JP Morgan Chase expressed his concerns this week that investors are underestimating the challenge inflation poses. To boot, he even mentioned the dreaded S-word:

“There are a lot of inflationary forces in front of us. The underlying inflation may not go away the way people expect it to … If you have higher rates and — God forbid — stagflation, you will see stress in real estate, leveraged companies, and private credit … I think the chances of something going wrong are higher than people think.”

The unemployment figures continue to defy expert predictions as the number who filed last week was 215,000 versus the 200,000 predicted and the 223,000 from the prior week. The final reading for consumer sentiment in May fell to 69.1 compared to April’s 77.2.

According to the Fed Watch tool, which tracks the prices of various futures contracts related to interest rates (particularly the federal funds rate), the likelihood of a rate cut in September has dropped to just below 50% due to the resilient labor market and recent Fed-speak.

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Up to the week ending on May 17, 2024, the ANFCI has moved to -0.57, which is a -0.02 increase from the previous week and a good sign for the investment climate.

Core Assets Update

Gold (2335.40) prices hit a record high midweek (2433.10) due to uncertainty about stability in the Middle East after the death of the Iranian president. However, by the week’s end prices dropped sharply. Speculation about the drop: reactions to the Fed’s hawkish minutes released Wednesday and claims that a typically volatile market is reacting to noise ahead of the long weekend. Experts nonetheless expect the gold market to stabilize (see sentiment analysis below).

Crude Oil (77.78) defied expectations and slumped ahead of the big travel weekend in the US, where 43.8 million people are expected to drive 50 miles or more. Experts cite the reason for the drop in price: the perception that supply is outpacing demand.

The 10-year Treasury yield (4.467%) dipped at the beginning of the week on the positive suggestion from Fed Governor Christopher Waller that the economy seems “to be evolving closer to what the Committee expected”. However, by the end of the week, the yield spiked as the strength of the labor market reinforced worries about the future.

                                         - 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 Research Team:

                     Dom Viera, Samantha Russell, Nicole Zinuhova, Michelle Milan

 

 

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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

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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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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