Get the Full Free Version of The Art of the Bubble Newsletter here.

The Macro Situation

lactic acid burn (noun)

• the myth that sore muscles result from the byproduct of cells breaking down carbohydrates for energy (i.e. exercise);

• the myth that the economy had been doing well all along and the resulting feeling of pain, panic, and worry when realizing the truth.

                                             ― New Entry in the Updated Devil’s Dictionary

The lactic acid burn in the economy might be starting to show. It’s comprised of debt delinquency and bond fatigue. 

• Markets reacted strongly this week to the news of a disappointing US bond auction of 5-year notes. Weak demand meant the bid-to-cover ratio, which is the dollar amount of bids received compared to those sold, was lower than the 10-auction average (2.3 versus 2.45).

• A huge signal of a lack of confidence in the economy, the lower ratio sent jitters across markets.

• According to the Fed, delinquent debt is on the rise. Most significant is that “8.9% of credit card balances and 7.9% of auto loans have become delinquent annually.”

• A bad debt situation can have knock-on effects with respect to consumer confidence, consumer spending, credit tightening, and lender solubility.

In other news, the Q1 GDP figure was revised down from 1.6% to 1.3%; the Personal Consumption Expenditures (PCE) index rose 0.3% in April; the PCE index (minus food and energy) rose 2.8% in April.

According to the Fed Watch tool, which tracks the prices of various futures contracts related to interest rates (particularly the federal funds rate), the chance for a rate cut in September is more or less flat compared to last week (46.6%).

Up to the week ending on May 24, 2024, the ANFCI has moved to -0.58, which is a -0.01 increase from the previous week and a good sign for the investment climate.

Core Assets Update

Gold (2347.70) prices rose Thursday after economic jitters about the bond market and slower growth. However, on Friday, even the cooling indications from the PCE weren’t enough as investors were cautious about the Fed’s strong stance on requiring several months of higher rates.

Crude Oil (77.18) dropped after the U.S. government reported weakening demand and a rise in distillate fuel stockpiles, which includes diesel and fuel oils like kerosene.

The 10-year Treasury yield (4.502%) surged on the back of the weak auction of 5-year notes, but found some grounding by Friday after PCE inflation data matched estimates.

                                             -Todd Mei, PhD and 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 Research Team:

                     Dom Viera, Samantha Russell, Nicole Zinuhova, Michelle Milan

Free Stuff!

1. Kaze NFT whitelist:

Join our Zealy campaign for a Kaze NFT whitelist. 

New Invitation Link

2. Rebates:

•  TradingView Rebate (Save $30)

•  Trojan Bot (Save 10% per trade)

•  Prodigy Bot (Save 10% per trade)

All proceeds go back to funding the community pool.

Note: we’re migrating our newsletter host, so formatting is changing a bit.

Happy Trading!!

Join us on Discord

Think About Paid

Our paid plans make use of the same base algorithm that our hedge fund, 1.2 Capital Management does, but modified in timeframe so you don’t have to stare at your screen all day. We have BOTH stock and crypto strategies.

Below is a recent comparison of our top trading strategies relative to BTC and ETH since the beginning of the current market cycle.

Discover our plans and upgrade !

That's it for today ! 

Don't forget to join us on Discord if you haven't already.

Happy trading!!
-The 1.2 Labs Team

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.