GM. This is Milk Road, the newsletter that helps make sense of macro every Tuesday so you can be a well-informed degen the rest of the week.
Here’s what we’ve got for you today:
- ✍️ The road back to risk on
- 🎙️ The Milk Road Show: When AI Agents Control Billions in Crypto, Where Will They Trade?
- 🍪 Bitcoin ETFs record ~$999M in inflows in the past 24 hours.
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Prices as of 2:00 p.m. ET. Powered by CoinGecko.
THE ROAD BACK TO RISK ON
The headline Milk Road Macro Index reading recovered from -1.10 to -0.57 over the past week.
Still in RISK OFF, but now sitting just 0.07 points below the threshold that would step the framework up to CAUTION.
Financial conditions and growth impulses did the work on the market side, lifting market momentum from -0.85 to -0.32.
The Fed hike resolved the immediate rate uncertainty. The VIX fell, and copper rebounded.
Bears have been pointing out that market breadth is very weak, and our indicators agree.
Breadth contributed almost nothing across the week. Roughly 30% of S&P 500 names are back above their 50-day trend lines even as the Nasdaq closed at a record high on AI-driven gains.
Our indicator flagged this same narrow-breadth problem before, yet the bull market has always continued. I expect this will eventually resolve, and the bull market will continue again.
The economy pillar answered one of the prior brief's open questions directly: rate pressure has not reached the hard data.
With jobless claims at a post-July low and the Atlanta Fed's Q3 GDP estimate jumping to 5.1%, we’ve seen a relief in economic stress at +0.00 and the macro buffer at full strength (+0.50).
This steady backstop has kept the posture from reaching its prior lows.
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THE ROAD BACK TO RISK ON (P2)
The Milk Road Macro Index now sits in a narrow decision zone: posture shifts to CAUTION if today's breadth improvement holds and spreads to more sectors over the next several sessions, and if breadth stays pinned at -1.19 while the AI rally fades before broadening, market momentum goes back down, and the posture follows.
The market is the thing to watch here. Futures look good, so I am optimistic for the moment.
The October 14th CPI print for September’s inflation data is the next thing to watch. A fourth consecutive 0.3% monthly reading begins bending the six-month inflation window and would put real pressure on the macro buffer for the first time.
The one pillar that has held steady through this entire period of the index going RISK OFF.
As far as crypto goes, I am not concerned about this as long as the trend keeps improving and doesn’t slip deeper into the RISK OFF territory.
The bull market has had periods like this before and always continued. I think it will again.
Also, these macro factors would have to be stronger in order to slow down the bullish momentum in the crypto markets too much.
For now, I don’t think that the macro setup should present serious risks to the crypto markets.
However, we will be closely monitoring the situation to see if the outlook improves or worsens.
If you want to see how the Milk Road analysts are navigating this market in their portfolios, check out Milk Road PRO today for just a buck and get in on the action.
Until next time, stay safe, stay educated, and stay bullish!
BITCOIN AT $86K: THE CRYPTO BULL MARKET IS BACK
LG and John discuss Bitcoin and the crypto bull-market breakout:
- Why the Bitcoin rally took everyone by surprise after the CLARITY Cloture vote failed.
- Did the regulators jumping in after the Senate stall save crypto?
- Are we too late to bid altcoins?
Watch here.
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Bitcoin ETFs record ~$999M in inflows in the past 24 hours.
First batch of SEC-approved trading platforms under the Innovation Exemption could go live in Q4.
Ethlabs calls ETH, the dollar equivalent, for the onchain economy.
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