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The Macro Situation

flat-free (adj.)

• when tires are airless and made of solid material to avoid flats;

• what seems to describe the stuff of the U.S. economy after a thorny last, few months.

                                             ― New Entry in the Updated Devil’s Dictionary

“[T]he economy is much stronger than previously thought, with little indication of a major slowdown in economic activity.”

                                                                     —  Chris Waller, Fed Governor

The significant news this week indicates that the U.S. jobs market and retail sector are doing better than expected:

• Last week’s jobless claims dropped to 241,000 from 260,000 the previous week; however, experts think the impact of Hurricane Milton lowered the number of submissions.

• Retail sales grew by 0.4% in September largely due to increased consumer spending in services and food, perhaps due to lower gas prices. Experts were predicting 0.3%, compared to an unrevised 0.1% for August.

If you believe the housing market is an accurate indicator of the economy, then there is some sobering news:

• In September, both housing starts and building permits experienced declines. 

• Privately-owned permit authorizations amounted to 1.428 million, which is 2.9% lower than the previous month’s figure. 

• Housing starts dropped by 0.5%, reaching a total of 1.354 million.

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 94.4% for 25bps and 5.6% for no cut.

The Chicago Fed made an adjustment to the ANFCI. The new reading places conditions at a -.57, which is flat with the (newly adjusted) -.57 of last week. This level indicates that financial conditions are still loose.

Core Assets Update

Gold (2736.40) prices are thriving amidst uncertainty about the U.S. political elections and tensions in the Middle East. Meanwhile, the US dollar (103.46) remains relatively strong given the positive economic outlook.

• Watch: GLD, GDX, NEM

Crude Oil (69.34) had fallen as much as 7% during the week due to China’s economic slowdown and mixed news about the Middle East.

• Watch: USO, VAL, XOM, RIG

The 10-year Treasury yield (4.083%) declined on the back of the jobless and retail sales data.

• 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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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.

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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

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