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
“We don’t need no stinkin’ dollars!”
The economy is preparing for Wednesday’s interest rate policy decision, where there is little doubt about the Fed’s course – i.e. a 25bps increase, to bring the total target rate to 525-550. Jobless claims have dropped (228,000) to a 2-month low, as the labor market remains immovable.
With easing inflation and a strong labor market, economists are warming up to the idea of there being no recession, though risks still remain (e.g. less government spending, tighter credit requirements, liquidity constraints). Goldman Sachs’ updated prediction is a 20% chance of recession.
Activity in certain sectors should dip accordingly, as higher rates put further constraints on liquidity.
- The housing market is at its slowest pace since June 2009 (oh, the Great Recession!).
- Mid- to long-term bonds will suffer until a possible final 25bps increase is worked out before the year’s end.
The effect on the bonds market has meant liquidity has tightened, and therefore the US dollar has decreased in value significantly. Gold remains up despite dipping at the end of the week, likely in anticipation of Wednesday’s rate increase.
Hence, next week might see a slight bump in the value of the dollar.
On the up end, oil is trending despite interest rates, which typically put a dampener on consumer traveling. The strength of the US economy plus a recent drop in US stockpiles has seen the crude oil sector gain momentum.
- Todd Mei, PhD and Sebastian Purcell, PhD
AI Sentiment Report
What follows are the ratings of our AI sentiment strategy as applied to various sectors--or individual stocks. They're best for next day analysis, but do given an indication over the coming week.
-The Research Team:
Dom Viera, Samantha Russell, Nicole Zinuhova, Aiza Malik
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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.