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The Macro Situation

bender (noun)

• a prolonged often wild drinking stint;

• retail season from October to December;

• a distorted view of the economy.

― New Entry in the Updated Devil’s Dictionary

The typical seasonal push to the economy is underway as retail activity ramps up. Consumer spending rose 0.4% last month. Meanwhile, jobless claims (213,000) remained lower than expected last week, and consumer confidence in November (111.7 vs. a revised 109.6 for October) has been bolstered by the prospect of moderating inflation. Things look a bit rosy.

Other indicators revealing a “Panglossian” picture:

• Personal income surged 0.6% last month.

• Q3 GDP was 2.8% vs. 3.0% in Q2.

• The Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index, rose 0.2% in October, with a 12-month inflation rate of 2.3%. Both figures were consistent with forecasts.

• The core PCE (less energy and food) rose 0.3% in October, with a 12-month inflation rate of 2.8%.

• The Fed’s November meeting minutes indicated that if economic data comes in as expected, with inflation continuing to move down and jobs remaining near maximum employment, then “it would likely be appropriate to move gradually toward a more neutral stance of policy over time.”

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 66% for 25bps and 34% for no cut.

The Chicago Fed made an adjustment to the ANFCI. The new reading places conditions at a -.66, which is a decrease compared to the (newly adjusted) -.63 of the prior week. This level indicates that financial conditions are still loose.

Core Assets Update

Gold (2681.00) was down compared to last week due to calming tensions in the Middle East and Trump’s nomination of Scott Bessant as the U.S. Treasury Secretary, whose approach might mitigate Trump's approach to tariffs and future inflation risks.

• Watch: GLD, GDX, NEM

Crude Oil (68.00) fell as a tenuous cease-fire in the Middle East appeared to be holding.

• Watch: USO, VAL, XOM, RIG

The 10-year Treasury yield (4.178) fell almost 5 basis points on the back of the PCE inflation 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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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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