While doom was permeating markets last week, crypto participants are a bit more cheerful with the passing of Thanksgiving and the beginnings of a market rally. Bitcoin has jumped 7.4% in the last 7 days, reclaiming $91,000, but still sitting nearly 28% off its August all-time high. Where’s it headed next? Predictors on Myriad are starting to lean bullish.  We’ll look at just how bullish while investigating some of Myriad’s top markets this week. (Disclaimer: Myriad Markets is a product of Decrypt’s parent c ...

In the meantime, stocks are wrapping up a turbulent November. Joining us today, Dan Greenhouse, chief strategist at Solless Alternative Asset Management. Dan, happy Friday.Good to see you. >> You too, sir. >> Sounds like you think the midmon AI freakout may be behind us.>> It looks that way. Listen, again, admittedly, there was a lot of nervousness about the amount of capex spending on the part of the of the large hyperscalers, but I keep coming back to the earnings reports themselves. You have most recentl ...

Investor Sentiment & Market Outlook - Investor sentiment regarding the sustainability of the AI trade experienced a significant boost in recent months, followed by a period of rethinking in the last four weeks [2] - Investor positioning indicators, including systematic positioning for CTAs, risk parity, volatility target strategies, and momentum signals, have decreased from above the 95th percentile to the 50th percentile, indicating reduced warning signals [5] - The market's catalyst for recovery in the next two to three months is earnings, not necessarily the Federal Reserve's December decision [8] Earnings & Sector Performance - Concerns around OpenAI overshadowed Nvidia's earnings, despite the company beating expectations and providing better guidance [9] - The earnings beat trade for the third quarter was the strongest since 2021, indicating a generally positive earnings season [10] - Consensus expectations for fourth-quarter sequential earnings growth for the S&P are down 1%, and excluding tech, net income expectations are down 8% [11] - Eight out of eleven sectors are expected to report a sequential decline in earnings, creating a potentially bearish setup [12] - Small and mid-cap companies in the United States experienced a relatively strong earnings season, offering potential fuel for the market beyond big cap tech stocks [14] - Broadening has been happening in the market, with industrials, healthcare, financials, and even energy sectors up 6% to 14% year-to-date [16][17] Potential Risks & Concerns - A major concern is when CapEx starts to decline, leading to worries about higher tech debt [1] - There are concerns that the open air universe might only benefit Google, potentially threatening the broader Nvidia and hyperscale trades [4] - Investors may have excessively cut risk or taken up hedges in November, potentially missing out on a market melt-up driven by earnings [12][13]

Group 1 - The importance of data center infrastructure to the economy is highlighted, indicating that market performance will largely depend on major tech companies [2] - Recent discussions have centered around the influence of AI and Federal Reserve policies on market dynamics, suggesting a complex interplay rather than a simple binary choice [3][4] - The market sentiment shifted from excitement about potential rate cuts and economic growth to a more cautious stance, impacting AI stocks more than underlying fundamentals [5] Group 2 - Consumer spending is expected to be supported by tax refunds and provisions from recent legislation, although the immediate impact of full expensing and bonus depreciation has not yet been observed [7][8] - There is a belief that companies may need more time to adapt to new policies, which could lead to a resurgence in non-AI capital expenditures [8] - Despite discussions about equal-weight S&P investments, the performance has predominantly favored major tech companies, with earnings growth being the primary driver rather than multiple expansions [10][12]

Market Overview - The market has seen a rally driven by mega-cap stocks, but there is concern over poor breadth and high volatility [3][4] - Recent developments, including a potential rate cut by the Federal Reserve, have shifted market sentiment positively [6][7][8] Company Insights - Nvidia has been a strong performer, but there are signs of valuation concerns leading to a shift in investment strategy [1] - Companies like Dell are showing strong revenue and profit expectations, contrasting with HP's announcement of layoffs [9][10] Economic Indicators - Durable goods data indicates strong business spending, with core capital goods growth surpassing expectations [11][12] - There is caution regarding excessive rate cuts, as they may signal economic slowdown rather than growth [12]

Core Insights - The Beige Book indicates a decline in employment across various sectors, highlighting a slowdown in job growth and potential economic challenges ahead [1] - Persistent inflation remains a significant concern, with prices continuing to rise despite efforts to stabilize the economy [1] Employment Trends - Employment levels have decreased in several regions, suggesting a broader trend of weakening labor markets [1] - Specific sectors, such as retail and manufacturing, have reported notable job losses, contributing to the overall decline in employment [1] Inflation Dynamics - Inflation rates are reported to be consistently high, with consumer prices increasing at a rate that outpaces wage growth [1] - The ongoing inflationary pressures are affecting consumer spending and business investment decisions, leading to cautious economic outlooks [1]

Market Performance - Bitcoin and Ethereum are down nearly 1% over the last 24 hours, while XRP has decreased by 3.1%, reversing earlier gains driven by ETF news [1] - Performance of other altcoins like Solana, BNB, and Dogecoin remains relatively stable, fluctuating between -1% and 1% [1] Market Liquidity and Volatility - Crypto markets will remain open during the Thanksgiving holiday, but liquidity and volume are expected to be low, potentially leading to increased volatility [2] - Market actions on this day are not necessarily influenced by the holiday, as noted by industry experts [2] Market Outlook - The crypto market outlook shifted from bearish to bullish after the likelihood of a December rate cut increased from 30% to 80% [3] - Investors are anticipating a quarter-point rate cut on December 10, which would lower the target rate to 3.50%-3.75% [3] Risk Sentiment - The repricing of Federal Reserve policy has led to a risk-on sentiment, with a 65% chance assigned for Bitcoin to reach $100,000 before hitting $69,000 [4] - While the outlook is currently bullish due to rate-cut expectations, it remains uncertain [4] Institutional Activity - Block options trading this week indicated $2 billion in long call condors from institutional or high-net-worth investors, suggesting expectations for Bitcoin to remain between $100,000 and $118,000 [5] - Analysts predict that traders will likely use a long call condor strategy, which is designed for range-bound assets [6] Options Market Insights - Options market data shows a negative skew and high short-dated implied volatility, indicating that bearish bets are still prevalent amid uncertainty [6]

Core Insights - Bitcoin may have reached an exhaustion zone, indicating a potential short-term bottom, as evidenced by the Short-Term Holder SOPR dropping to 0.94 while prices fluctuated between $80,000 and $90,000 [1][2] Market Indicators - A SOPR reading below 1.0 indicates capitulation from newer market entrants, historically aligning with local lows and subsequent sharp recoveries [2] - Recent SOPR dips have been observed in early 2023, late 2023, mid-2024, and this month, where short-term holders realized losses during selloffs, followed by market stabilization as liquidity shifted to stronger hands [2] Market Dynamics - The current market movement is characterized as loss realization rather than structural deterioration, suggesting aggressive unwinding rather than a breakdown in long-term positioning [3] - Bitcoin's price drop below $90,000 occurred primarily during U.S. trading hours, coinciding with a rebound in equities due to weaker U.S. consumer data and increased expectations of a December rate cut [3] Analyst Perspectives - The crypto market's rebound is closely tracking U.S. equity performance, lacking independent momentum [4] - The recent price bounce is viewed as a counter-trend move within a broader seven-week decline, with $88,000 identified as a critical threshold for confirming a local bottom [4] Market Sentiment - Other indicators suggest the market is attempting to establish a floor, with a sharp unwinding of open interest in derivatives indicating that leveraged longs have been largely cleared out [5] - Eased funding rates and flat trading in perpetual swaps after a week of negative premiums suggest a low-energy environment, historically preceding short-term price reversals [5] Future Outlook - With Federal Reserve officials signaling a shift towards easing and improving global risk sentiment, a stabilizing SOPR may indicate that sellers are losing momentum [6]

Market Movement - The market experienced a volatile start with the Nasdaq initially down due to reports of Meta potentially investing billions in Google's custom AI chips instead of Nvidia, leading to a 5% drop in Nvidia's stock while Alphabet gained 1% [1] - By the afternoon, the market rebounded significantly, closing with solid gains across all major indexes, indicating a broad-based recovery rather than reliance on the largest tech stocks [2][6] Economic Indicators - Macro data released was largely negative, including weak ADP jobs, poor retail sales, cooling housing market, and low consumer confidence; however, this bad news increased the likelihood of a rate cut in December, now estimated at over 80% following dovish comments from John Williams [2] - The 10-year yield fell below 4%, the dollar weakened, and stocks rallied as a result of the negative economic data, suggesting a potential year-end market rally despite ongoing uncertainties [2] Trend Tracking Indexes (TTIs) - The domestic Trend Tracking Index (TTI) showed a significant increase of 5.32% above its moving average, with a "Buy" signal effective from May 20, 2025, indicating a bullish market outlook [7] - The International TTI also performed well, closing at 8.60% above its moving average, with a "Buy" signal effective from May 8, 2025, reflecting a recovery in global markets [7]

Core Insights - The current economic growth, driven by the AI data center boom, is not translating into significant job growth, indicating a potential disconnect between GDP growth and labor market strength [1][3] - The Federal Reserve is expected to continue cutting rates due to a weakening labor market, despite inflation being slightly above their target [4][5] - A K-shaped recovery is observed among consumers and corporations, suggesting that not all sectors are benefiting equally from the economic growth [6] Federal Reserve Expectations - The Fed's plans for rate cuts may be disrupted by labor market weaknesses, which could lead to a more stimulative approach [4][5] - A December rate cut is anticipated, with additional cuts likely in the following year as the labor market continues to weaken [5][6] - The Fed is currently above neutral and may continue to cut rates to avoid being restrictive [7] Fixed Income Market Implications - Weakening labor market conditions and potential Fed rate cuts could lead to favorable returns for fixed income investors, particularly in the front to belly of the yield curve [9][10] - The market is pricing in Fed funds forecasts that are considered too high, suggesting benefits for those taking interest rate risks [10][12] - A diversified portfolio that includes emerging markets and securitized products is recommended to capture higher yields and spread opportunities [13][24] Investment Strategies - Agency mortgage-backed securities and commercial mortgage-backed securities are highlighted as attractive sectors due to their potential for spread compression and benefits from falling interest rates [18][19] - The recently launched Eaton Vance Income Opportunities ETF (XAGG) aims to provide exposure to a barbell approach in fixed income, focusing on sectors that offer higher yields and diversification [20][21] - The ETF targets a weighted average investment grade, ensuring a balanced risk profile while seeking outperformance compared to traditional fixed income investments [22][23] Long-term Outlook - Fixed income returns are expected to be centered around current yields, with a potential for additional returns through strategic interest rate and curve positioning [26][27] - High base treasury yields are seen as a hedge against risk assets, particularly in a balanced portfolio [28][29] - Inflation is projected to stabilize around 2% in the coming year, which would benefit fixed income investors as tariff-related inflation subsides [30]