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The Macro Situation

the Good Place (noun)

• heaven;

• an American television fantasy-comedy based on the idea that the main character has died and finds out mistakenly she is in the good place instead of the bad place;

• the bad place;

• an economic reality based on the idea that consumers are unhappy when they should be more positive about the state of inflation and the jobs market.

― New Entry in the Updated Devil’s Dictionary

While financial markets reacted to the hype surrounding the election news, the economy is in “a good place” (J. Powell):

• The Fed cut interest rates by another 25bps (450-475).

• Non-farm productivity increased at a 2.2% annualized rate in Q3.

• The productivity rate for Q2 was revised down to 2.1%

• At the same time, the price of labor rose by 1.9%, or 3.4% from a year ago.

• The weekly jobless claims (221,000) rose slightly by 3,000 compared to the previous week.

• Despite what post-election analysis has said about the poor economy being a factor, consumer sentiment is at its highest (73.0) since 2021.

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 December are 64.6% for 25bps and 35.4% for no cut.

The Chicago Fed made an adjustment to the ANFCI. The new reading places conditions at a -.54, which is flat with the (newly adjusted) -.54 of last week. This level indicates that financial conditions are still loose.

Core Assets Update

Gold (2691.70) prices faced downward pressure due to the election. According tro FXEMPIRE, the reaction “is reminiscent of 2016: gold prices fell sharply, accompanied by a surging dollar and rising 10-year yields. If the analog holds, metals and miners could remain under pressure into mid-December.” The US dollar remains strong (104.95).

• Watch: GLD, GDX, NEM

Crude Oil (70.43) prices were initially bolstered by the election outcome (i.e. energy policy changes) and prospects of increased energy output in the future. However, prices fell later in the week due to hurricane Rafael’s weakening and a disappointing Chinese stimulus package.

• Watch: USO, VAL, XOM, RIG

The 10-year Treasury yield (4.306%) spiked on what was taken to be positive news about economic growth in the upcoming Trump era. Yields fell at the week’s end after the interest rate cut announcement.

• 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

Free Stuff!

1. Kaze NFT whitelist:

A Post-Election launch is now in the works.

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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.

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