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The Macro Situation
- a state where the economy is between expanding and contracting;
- a fairy tale;
- an economic fairy tale.
― New Entry in the Updated Devil’s Dictionary
Markets reacted strongly to the Personal Consumption Expenditures (PCE) Index, or what consumers are spending. October’s numbers were down (0.2%) to that of September’s (0.3%). Initial jobless data came in higher than the previous period, with an increase of 7,000 claims.
Is the economy cooling, reaching the just-right, Goldilocks spot – not too hot, not too cold?
It’s too early to tell, and the Fed knows it. JPowell stated on Friday in his Spelman College fireside chat,
“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so.”
However, markets were not put off by these comments. Stocks posted their best monthly performance in November since 2022, with the S&P (4,594.63) closing at its highest for 2023.
As the economy continues in the cooling direction, Gold (2091.70) maintained its steady upward pace, closing at its highest in over a year.
Initially, Crude Oil spiked midweek (79.26) due to news that OPEC+ would cut an additional 1 million barrels per day. However, that same news ended up creating concern amongst investors. Is the cut enough? Oil closed down 6.2% from the midweek rally at 74.38.
Despite Powell’s “warning”, long-term treasury prices spiked, with their yields inversely decreasing. The 10-year yield closed at 4.21%, the 2-year at 4.55%, which leaves the spread between the 10 and 2 year notes at -0.34. The lowest was -0.13 on October 25th, 2023.
- Todd Mei, PhD and Sebastian Purcell, PhD
AI Sentiment Report
The following sentiment scores use ChatGPT as part of the AI tech stack 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 methodology employed is based on this peer reviewed academic article, which produced 550%+ results in back tests over a 2 year time frame. We consider 4 and 5 scores to be positive, but please bear in mind that the AI model is still in its validation phase.
-The Research Team:
Dom Viera, Samantha Russell, Nicole Zinuhova, Aiza Malik
Holiday Free Stuff
Simply by joining us on Discord and commenting you get points. At the end of the season, we'll distribute the community pool to members with a level 10 or higher.
The community began with $1000 in ETH on Dec 1 and it will be trading the Crypto Maxi+ strategy -- an experimental strategy that also buys RNDR and LINK (beyond just BTC and ETH).
We're giving out bonus points for suggestions of good coins and in future seasons we'll invest in those as part of the community pool.
And remember, that if you use any referral links -- rewards go into the community pool too.
Think About Paid
Our subscriber plans make use of the same base algorithm that our hedge fund, 1.2 Capital Management does, but modified in timeframe so you don’t have to stare at your screen all day.
Below are two of our data service offerings for stocks. The Bubble Portfolio has never had a down year and the Leveraged Portfolio should be 3x the QQQ (so negative), but it’s outperforming by better than 12%.
Upgrade to Paid Disclaimers
This newsletter is provided for educational and entertainment purposes only and should not be relied upon for business, investment, taxation, or legal advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by 1.2 Capital Management. (An offering to invest in a 1.2 Capital Management fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation--all of which should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by 1.2 Capital Management, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
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