8/17 Weekly Macro Note: Retail Mania, Macro Week Ahead, Rate Cut Uncertainty, Bitcoin Risk Signal, The Fed's Binary Choice, and More

In this Weekly Macro Note - the team discusses the latest update on current retail mania, highlights rate cut uncertainty, early warning signals from Bitcoin, Fed's tough choices, and much more.

(@DonMiami3, MacroEdge Chief Economist)

Good Sunday evening MacroEdge Readers and Community, 

As we move through the halfway marker for August, we’ve got another week ahead of macro and employment data, make sure to read our AlphaSights Report (the first one) to learn more about our expansion and what we’re doing with our newest offering. The speculative appetite continues in US markets overnight, though continued narrowing of breadth is being seen with that appetite not bleeding over to crypto and other ‘super beta’ asset classes. In Japan, the Nikkei continues to surge, though elsewhere like Europe, some negative signals are emerging from a risk:reward standpoint that deserve monitoring. We’re in touch with all of it, and until cracks widen from a risk standpoint in US equities, hedging with longvol and other simplified strategies keep the R:R in check until the asymmetry is whacking us over the head. 

Unveiling AlphaSights 

Read our introduction to AlphaSights - the what, why, and how of our latest offering - powered under our Research umbrella. To read our first report, from August 1st, and learn more about AlphaSights - our insight engine for institutional investors and fund managers - visit the link below and visit the bottom of the page: 

AlphaSights is the investor intelligence layer we built for operators. It finds inflection points before they become consensus and converts them into auditable signals you can use to size, time, and manage risk in the 3 to 12 month window. You get monthly thematic notes, intra-month alerts, a quarterly strategy call, and our Fund Manager Intelligence Survey that shows how real capital is positioned. The process is visible, the models are clean, and the objective is simple: better inputs, faster cycles, tighter execution.

For non-institutional investors, you can still access MacroEdge Ozone for two weeks at: 

The Macro Week Ahead 

There’s a combination of interesting data + consumer heavy earnings this week. Walmart is leading the pack from a company size standpoint, and HomeDepot will provide an interesting gauge into things like the housing sector. 

Largest names in earnings: 

Rate Cut Uncertainty is Still Quite High for 2025 

While the certainty around September has shifted since the soft July employment numbers print - there’s still uncertainty to the pathway beyond that. Right now, a lot hinges on Jackson Hole and the tone that this Fed chooses to adopt in the last few quarters of Powell’s tenure. There is still great concern around embedded inflation at the Fed, while there remains concern about the gradual slowbleed in the labor market that had its wind taken out of its sails - per se - as mass migration has nearly completely stalled. 

How we’re viewing rate cut odds: 

Currently priced at 2 cuts for the remainder of the year as the most likely outcome, with the potential for just a single cut, and up to 4 up and down the scale. It looks like right now, that the pathway includes two, though the Administration is likely to remain on the ‘rate cut’ gas, I’m very curious to see how PCE/Supercore/CPI/PPI trend the remainder of the year, and how the new BLS lead may impact jobs data for the rest of the year. It’s going to be a very interesting time in the world of data.

Few Scenarios for What We’ve Seen 

As for valuations, internals, and other market gauges, concentration has expanded markedly into a select few equities and industries since the April global bailout lows. With intervention worldwide, we’ve seen broad rallies across the globe in equity/risk markets - and especially back in the AI theme names that has even trickled back into some IPO market insanity in the past few months, where a name will be listed - catapult higher - and subsequently collapse a week or two later once the hype has faded.  Valuations are stupid, concentration is worse, and speculation is the operating system. A handful of names are carrying the market while everyone else pretends that breadth is a detail. Investors have gone all in with no exit plan because the casino keeps rewarding it. Policy cuts the drawdowns, buybacks smooth the charts, and every dip trains the same reflex. That is not a strategy. That is moral hazard with a ticker. If liquidity/passive investing steps back even an inch and the bailout brigade is unable to come to a consensus for a period of time, the exit turns into a pinhole. The signals that saved them last time have not fired this time, and the crowd is still piling in like it’s guaranteed. When the passive parade slows again for the next drawdown, it will be people staring at screens, wondering why portfolio models built on bailouts and momentum have nothing left to say. 

(At 38.5 as of the close last Friday) 

As just another example to answer my frequently posed question of ‘where in cycle?’... investor margin is set to surpass total outstanding credit card debt in July…

vs another American favorite… credit card debt: 

vs history… 

(and not a forecast)

The Bitcoin Risk Signal 

As Bitcoin leads as a liquidity/volatility and risk signal - and especially did from the April lows, rallying before the broader equity market did - it remains a very important signal to watch now, given its setup, and the risks outlined above in valuations and internals. While we’re priced for perfection (well beyond that) it would take things like QE/M2 windup, a pro-inflation narrative, and something like hints of YCC to really make any of this make sense. While many of these AI companies may be positioning themselves as TBTF (to big to fail) something I wrote about in 2024 - that doesn’t mean that we can ignore risks after this Dotcom/Japan-late 80s run up the last few months.