GM. This is Milk Road, the newsletter that John takes over every Tuesday to make sense of macro.
Here’s what we’ve got for you today:
- ✍️ The market and economy finally align.
- ✍️ What does all of this mean?
- 🎙️ The Milk Road Show: Everyone Is Waiting for the Bitcoin Bottom… What If It Already Happened?
- 🍪 DeFi's next wave will be driven by institutions chasing yield on their stablecoins.
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THE MARKET AND ECONOMY FINALLY ALIGN
Alright everybody, be cool. I have some decently good news, so just stay calm.
The Milk Road Macro Index reached +0.53 this week, marking the firmest RISK ON reading in weeks and indicating 100% exposure.
Both the economy and the market pillars resolved in the framework's favor simultaneously for the first time since the July payrolls miss introduced a gap between them.
(Hold for applause.)
Inflation seems to be relatively under control. July core consumer prices rose just 2.5% year-over-year, and producer prices came in flat on the month. The inflation direction metric holds at +0.00, and the macro buffer is fully intact at +0.50.
On the market side, there are bullish signs across the board.
Momentum at +0.78 reflects a broad advance, copper at record highs above $6.77 per pound, roughly 72% of S&P 500 members trading above their 200-day moving averages, and high-yield spreads at 2.71% showing no credit stress.
On the economy side, ten consecutive months of retail sales growth and weekly jobless claims near historic lows at 209,000 keep the real economy score just positive at +0.04. Which is all the macro buffer needs to stay fully in place.
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WHAT DOES ALL OF THIS MEAN?
The market and economy are now pulling in the same bullish direction.
The stress score sits at +0.00, the goods pipeline is actively disinflationary, and the equal-weight equity index outpacing the cap-weighted index tells you the advance is spreading rather than narrowing to a handful of large names.
That’s a welcome change for a market that has been defined by concentration for months.
The single remaining watch-point is August payrolls on September 4th. A second consecutive monthly decline would pull the real economy score below zero for the first time this cycle, and that could be considerably more threatening if the unresolved Hormuz standoff escalates at the same time.
Absent that combination, the dashboard has its cleanest setup of the cycle.
How is Hormuz?
Well, at the time of writing, there are reports of ANOTHER ship being struck. So it seems that the ceasefire may be ceasing. Again. Unfortunately.
Wen crypto?
Paul Tudor Jones has been buying IBIT.
Jan van Eck is buying Bitcoin.
And Stanley Druckenmiller even disclosed a position in PURR, the HYPE digital asset treasury company.
The smart money is ALREADY in position for the next crypto bull market.
If you’re not, it’s time to make a plan. If you want to see what’s on my watchlist, join Milk Road PRO and let’s do this.
In the meantime, stay safe, stay educated, and stay bullish!
BITE-SIZED COOKIES FOR THE ROAD 🍪
Altcoin Daily: DeFi's next wave will be driven by institutions chasing yield on their stablecoins.
Novogratz: the CLARITY Act likely passes - but Trump may not actually want it to pass…
Matt Hougan: DeFi tokens are absurdly cheap right now. The old reasons to overlook them (no revenue for holders, regulatory risk) are no longer accurate.
👉 See the media kit or book 15 minutes
MILKY MEMES 🤣
ROADIE REVIEW OF THE DAY 🥛
VITALIK PIC OF THE DAY
