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The Macro Situation
Data-driven (adjective):
- guided by the collection of data and evidence when making key decisions;
- the mode of the starship USS Enterprise when helmed by the android Data.
(noun)
- the state preceding the feeling of EITHER paralysis due to having too much information OR euphoria due to having gotten it right.
― New Entry in the Updated Devil’s Dictionary
Set the automatic pilot and “make it so!”
It appears the long-awaited pivot may be underway.
The Fed has indicated that it’s “not likely” that they’ll hike, although they don’t rule out future increases. The risk of keeping fiscal tightening measures on too long, due to a lag in inflation data, might induce a full-blown recession.
Markets exulted this week. And consumer sentiment? Well,
“[it] soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation. Sentiment is now about 39% above the all-time low measured in June of 2022 but still well below pre-pandemic levels.”
Whether rate cuts are really in the offing next year has yet to be seen.
- Inflation is still high.
- New York Fed president John Williams stated on Friday that talk of a rate cut in March would be “premature”.
While we currently sit at 525-550, here’s what economists think about the March Fed Meeting:
In the meanwhile . . .
Crude Oil (71.79) spiked in anticipation of the pivot and a mostly weakening US dollar (102.59); it then faced downward pressure due to Williams’ guarded comment.
Gold investors have shifted their attention in view of the Treasury market. As rates begin their steadying course, long-term Treasury yields (10-year: 3.915!) are slumping. Non-interest-bearing gold looks a bit more attractive as a result. Gold closed at 2033.80.
- Todd Mei, 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
Free Stuff!
This is just a reminder that comments on our Discord server get points and if you're over a level 8, you'll be eligible for a coin airdrop at the end of the holiday season.
Happy Trading!!
-The Team
The 1.2 Labs Edge
Our paid 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%.
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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