GM. This is Milk Road, the newsletter that’s never been hacked, but we also don’t have ~$150B worth of crypto. Yet.
Here’s what we’ve got for you today:
- ✍️ Still risk off, but the gap is closing.
- ✍️ Still running on empty.
- 🎙️ The Milk Road Show: Ethereum's Bull Case Is Getting INSANE - Here Are 3 Reasons Why.
- 🍪 Bitcoin fees are drying up.
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Prices as of 2:00 p.m. ET. Powered by CoinGecko.
STILL RISK OFF, BUT THE GAP IS CLOSING
The Fed held rates last week, and we got a huge slew of economic data.
I don’t know if you’ve noticed, but to me it seems like the bulls and the bears are all loudly arguing that they have been proven right. It’s a fascinating time in macro because it seems like both sides are seeing in the data and in Fed Chairman Warsh’s comments confirmation of their views.
What’s the truth?
Well, let’s unpack this a bit more.
First, the Milk Road Macro Index improved to -1.03 this week, up from -1.32.
Quick refresher: our index combines market momentum, the economy, and a stress gauge into one score, and that score helps us decide if the macro landscape is RISK OFF, RISK ON, or just simply CAUTION if it’s not clearly tilting in either direction.
For the last few weeks, it’s been RISK OFF, but it’s getting closer to the next zone up, CAUTION, which starts at -0.50.
The gap is now 0.53, down from 0.82 last week. That’s some improvement, which is good, but it’s not all clear yet.
This is part of why both sides, the bulls and the bears, are finding reasons to declare victory, even if they haven’t totally won yet.
What changed?
Once again, all of the improvement in our index came from markets:
- Market momentum: -0.77, up from -1.07.
- Macro buffer (the economy): +0.49, down a hair from +0.50.
The two pillars, the market and the economy, are now heading toward each other from opposite ends.
Markets are healing because the AI selloff stayed inside tech and chips and didn’t spread to everything else.
The economy is going the other way. Headline growth is still strong, but household income is starting to show its first wear. Stress score came in at +0.14, up from +0.01. This higher print is a sign that the economy is starting to feel some stress.
So, what have we learned since last week?
Last week’s questions, answered
Most of what we were watching got an answer:
- The Fed held rates, but two officials voted to hike. Markets still price a 73% chance of a hike in December.
- Big Tech earnings showed investors will pay for AI spending that cash flow covers, and punish AI spending that it doesn’t.
- Thursday’s inflation data came in strong on output and in line on core prices. A hot core inflation number would have hit the economy pillar, but it didn’t. WHEW.
Those questions were all answered. It’s a mixed bag, but more or less fine. But one big question still won’t go away…
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STILL RUNNING ON EMPTY
Oil is the one question still open. Brent is at a six-month high, and traders are bracing for an escalation in the Iran war after Tuesday’s midterms.
In my interview with Lyn Alden, she specifically said that this energy crisis is the biggest risk to the market and the economy. And it refuses to resolve.
A lot of people are debating what happens after the U.S. midterms. I’m hoping for peace. Whatever happens though, it will likely have a big impact on the global economy.
We’ll continue monitoring the situation.
The path back to CAUTION
I’ve been writing about what might get us back to RISK ON territory, or at least out of RISK OFF for a while. Here’s my updated take.
The economy can’t add much more from here. Its buffer is already near full strength, so the upgrade has to come from markets.
Another week like this one would close more than half of the remaining gap.
But Friday showed how fast that can reverse. The S&P 500 fell 1.82% after Intel and Amazon reported, which shows the AI trade can still drag the whole market down with it.
I would also point out that this has been a historic deleveraging event in the markets, but eventually, I think this will mean-revert, and we will see a strong bounce in the markets.
Don’t panic.
Things will look much different on the other side of the U.S. midterms.
What we’re watching this week
- Apple earnings (tonight): a test of whether the tech selloff spreads beyond the biggest AI spenders.
- The midterms (Tuesday): plus any Iran escalation (or maybe de-escalation) that follows.
- The jobs report (Friday): forecasters expect 55,000 new jobs.
Bottom line
Calmer oil and steady hiring would push the index toward CAUTION. Regardless, we need the market to have confidence that the energy crisis is ending to really get momentum back.
A weak jobs number on top of the income squeeze would start to wear down the economy macro buffer, which is the one thing still holding the economy pillar up.
What about crypto?
If you want to hear my thoughts on the Binance hack, LG and I did a special episode covering it last week.
I won’t repeat that here, but I will say that Bitcoin is still holding up above the 50WMA, which is my reference point for the bull market support band.
I don’t care what anyone says. That is insanely bullish.
While all of these macro conditions and liquidity constraints present headwinds, I do not expect crypto to break out.
What I do expect, however, is that eventually the liquidity will come, and the strengthening fundamentals and demand for digital assets will cause Bitcoin and crypto to lead the risk asset markets in a way that they haven’t for a long time.
In the meantime, if you’ve been in the crypto trade with me, you’re doing pretty well.
Stocks, gold, and pretty much everything else have been down in recent weeks.
Meanwhile, Bitcoin is still holding its trading range and sitting above the bull market support band.
Bitcoin is in a bull market. Act accordingly until further notice.
I’m buying crypto this week. If you want to see what, join Milk Road PRO today for just a buck.
See you there!
Until next time, stay safe, stay educated, and stay bullish!
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BITE-SIZED COOKIES FOR THE ROAD 🍪
Every $BTC to $ETH swap is a taxable event. But inside a crypto IRA, it generally isn't. Here's how Roth and Traditional crypto IRAs work (and the catches).
Crypto’s midterm money: Industry groups have put ~$176M into 100+ races before Tuesday’s vote, and ~$150.8M of it came from Fairshake and its affiliates.
Stocks 1, BTC and gold 0: The S&P 500 is up 13.1% in 2026 (through Oct 28), while Bitcoin is down 7.2%, gold is down 6.7% and Ether is down 20.6%.
Bitcoin fees are drying up: They made up just 0.63% of what miners earned in 2026 through Oct 28, on pace for the lowest yearly total since at least 2012.
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