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The Macro Situation

preemption (noun)

• the act of preventing an event by taking action before it happens;

• buying an E-ride ticket before the park opens;

• an oblique confession that one’s got it wrong and wants to make up ground.

                                             ― New Entry in the Updated Devil’s Dictionary

“Moderation was the mantra of the last policy regime,” according to Yahoo Finance reporter Hamza Shaban. “But preemption is the new, bold watchword.”

The big news this week was not only did the Fed cut interest rates for the first time in four years, but that it did so by 50bps. The last time it cut rates by that much (excluding the Pandemic) was in 2008, during the global recession.

One of the key intentions of the cut, according to Jerome Powell, was to keep the labor market healthy before significant layoffs occur. 

• While jobless claims numbers are a volatile data point, the Fed’s remarks were confirmed by last week’s numbers which came in well below the forecast: 219,000 vs. 229,000. 

• The previous week, there were 231,000 claims.

At the time of writing, the Fed Watch tool, which tracks the prices of various futures contracts related to interest rates (particularly the federal funds rate), estimates the chances of a rate cut in November are 51.1% for 25bps and 48.9% for 50bps.

The Chicago Fed made an adjustment to the ANFCI. The new reading places conditions at a -.53, which is a decrease from the (newly adjusted) -.51 of last week. This level indicates that financial conditions are still loose.

Core Assets Update

Gold (2647.10) is building momentum as the start of the rate-cut cycle is underway. The US dollar (100.74) has correspondingly weakened.

• Watch: GLD, GDX, NEM

Crude Oil (71.25) has risen due to escalating tensions in the Middle East and the 50bps interest rate cut by the Fed. 

• Watch: USO, VAL, XOM, RIG

The 10-year Treasury yield (3.741%) spiked as the likelihood of a recession has waned and investment strategies shift.

• Watch: TLT, EDV, IEF

                                             -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

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

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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.

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.

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