Welcome to the free State of the Market report for the Art of the Bubble! Our subscriber plans make use of the same base algorithm that our crypto hedge fund, 1.2 Capital, does. It’s modified in timeframe and weighting so you don’t have to stare at your screen all day long. In 2022, for cryptos, the Dynamic Algorithm outperformed its benchmark by better than 70%. In 2022, for stocks, the Bubble Portfolio outperformed its benchmark by better than 40%. For those of you who are accredited investors, 1.2 Capital has re-opened new investor onboarding. If you are interested in learning more please reach out to us here.
The Macro Situation
Let there be cause for pause.
The Fed will keep interest rates level for June with the caveat that it will likely need to increase rates by another 50bps. Core inflation is down to 4%, much of this is due to a decrease in the cost of energy. Other consumer costs—such as, rents and cars—remain relatively high.
Across the pond, it’s a different story. The European Central Bank raised rates another 25bps with the expectation it will do so again in July.
The elephant in the room: financial liquidity. A pause in hikes helps to counterbalance the US debt ceiling increase and the worry about US bank lending. Commercial bank lending is tightening, down 1.61%. Historically, this does not bode well for the S&P, which tends to lose value in the wake of this trend.
In the meanwhile, a weakening US dollar means bonds and precious metals are doing well. The 10-year US Treasury note is down to 3.767, at one point dropping midweek to its lowest since May 30. This is a positive sign for borrowing costs and growth.
Oil is gainin strength given the perceptions of a recessions delay.
Macro-Dependent Tickers
- Long-term US Bonds: TLT, IEF, IEI
- Metals: GLD, SLV
- Oil: XOM, SLB, RIG, VLO
Stock Watch
Repeat from last week: Though the week ended in the red, the macroeconomic situation is boosting markets. The S&P and Nasdaq posted the best gains since March.
Liquidity constraints and the Fed course of rate hikes remain the immediate factors that can change trading confidence. The current bullish trend suggests markets can absorb a 50bps hike.
Stock Portfolios
Artificial Intelligence
- Lead Indicator - QQQ
- Microsoft (MSFT)
- Alphabet (GOOG)
- Meta (META)
- Amazon (AMZN)
- Nvidia (NVDA)
- Micron Technologies (MU)
- Advanced Micro Devices (AMD)
Lithium
- Lead Indicator - LIT
- Global X ACDC (ACDC)
- HACK
- SEDG
Green Energy
- Lead Indicator - Tesla (TSLA)
- PLUG
- GOEV
- NIO
Crypto Watch
The SEC’s lawsuits are still dominating headlines and crypto prices. Mid-Cap and smaller coins have responded most strongly to the news. Recall that 7% price swings don’t need explanations in cryptos, as those are typical 1 day movements even for BTC and ETH.
In addition, the news of future interest rate hikes and persisting constraints on liquidity has put significant pressure on the crypto market despite the bullish trends within TradFi.
Real World Assets are still attracting the most attention from large institutions such as BlackRock, which sees this space as the catalyst for the next crypto bull market.
Crypto Narratives:
- Lead Indicator: TOTAL / BTC
- Bank Safety: BTC, STX
- DeFi / RWA: ETH, ARB, OP
- “AI” Narrative: FET, OCEAN, RLC, RNDR
-Todd Mei, PhD and Sebastian Purcell, PhD
If you found this helpful, Subscribe to The Art of the Bubble’s free newsletter.
Join us on Discord for live chat and daily updates.
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.
