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.
How To Read The Report
Sentiment Scores use ChatGPT as part of the AI tech stack to rate stocks or sectors.
- Scores range from 1 (worst) to 7 (best).
- These are short term scores (ideally updated daily)
- A 3.5 is a minimum score for a long strategy.
The Macro Situation
Snap! It’s worth revisiting a point from last week’s SoM:
“But along with the good news of economic resilience is a not-so-good sign that jobless claims appear to be decreasing. If wages begin to increase, the Fed will be pressed to revisit their inflation dampening strategy. At least a 25 bps increase is on slate for July.”
This week’s ADP jobs report indicated strength with over half a million jobs added in June; the government report was much lower (209,000), but nonetheless confirmed resilience.
Crackle! This means we’re not just in for a “Tale of Two Quarters” – Q2 ending strong, Q3 looking like we’re back to the path of rate hikes. We’re also entering the Economic Liminal Zone. To what are we transitioning when the economy appears strong and inflation persistent?
In a word, “uncertainty”. Markets spent the week pricing in a rate hike for July.
Pop! So, we’re not just back to the rate hike path; we’re back to putting pressure on parts of the economy (i.e. bond liquidity and mid-sized banks) that were already under pressure.
Macro-Dependent Tickers
- Long-term US Bonds: TLT - sentiment score 4 (same as last week)
- Medium-term US Bonds: IEF - sentiment score 4 (up from 2.5)
- Gold: GLD - sentiment score 4.14 (up from 3.3)
- Oil: SLB, XOM, VLO, RIG - sentiment score for oil: 3.3 (down from 4.8)
Stock Watch
Stocks that may be more resilient to the upcoming hikes? Companies introducing notable utility and those that are riding the crest of an earlier sales strategy.
Meta has launched its competitor to Twitter in Threads and gained over 30 million users. It’s simply a replacement, using older social media platform tech. But it may just be enough to lure users away given Twitter’s current state and the easability of transferring images from Instagram.
Tesla had an enormous Q2 result, with 80% more vehicles delivered than the previous year. It has planned to produce 480,000 more vehicles in order to capitalize on the tax credit for EVs in the US.
Artificial Intelligence
- Sector Lead Indicator - QQQ - Sentiment Score: 3.7 (down from 5.3)
- Tickers: NVIDIA, MSFT, GOOG, META, AMZN, MU, AMD
Green Energy
- Sector Lead Indicator - TSLA - Sentiment Score: 3.4 (down from 4.71)
- Other Tickers: PLUG, GOEV, NIO
Crypto Watch
Future rate hikes highlight Bitcoin’s role as the hedge in the “Banks Safety Narrative”. However, significant news lies in the offing as the SEC is to meet with applicants intending to create a Spot Bitcoin EFT, which would enable people to invest in BTC without having to buy the coin.
Otherwise, most of the crypto market is suffering due to the macro situation – though, there are signs that crypto’s correlation to TradFi is decreasing.
Solana has been making headlines due to its introduction of Super Stake SOL, which “allows adventurous traders to earn up to ten percent additional yield by leveraging their Solana staking derivatives.” SOL broke the $17 resistance level. Should it remain above it, pundits are feeling bullish about SOL.
Crypto Narratives:
- Sector Lead Indicator - TOTAL / BTC - Sentiment Score: 4 (down from 4.36)
- Bank Safety: BTC, ETH
- DeFi Goliaths: SOL
- XRP-SEC: XRP
-Todd Mei, PhD and Sebastian Purcell, PhD
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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.
