Your Macro Framework Is Missing the Strongest Signal in the Market w/ Caleb Franzen

Quick Overview

Caleb Franzen asserts that the current stock market uptrend remains firm, supported by strong forward 12-month earnings and revenue growth across sectors, while Bitcoin is currently acting as a speculative risk-on instrument that is struggling relative to broad equities due to a broader decline in risk appetite, specifically noting that Bitcoin's trend has shifted bearishly by breaking below its 400-day moving average cloud.

Key Points: The S&P 500 is in a very firm uptrend, supported by forward 12-month earnings making new all-time highs, which aligns with the market being a forward-looking pricing mechanism. Revenue growth across S&P 500 sectors, such as Information Technology growing revenue at 18% year-over-year, justifies valuation increases, confirming that consumers and businesses are spending. The softening labor market, evidenced by the unemployment rate rising to 4.4% (a normalization from 3.4%), has given the Fed room to cut rates, which equities are pricing in, causing the S&P 500 and unemployment rate to rise in synchrony. Bitcoin has objectively shifted its trend to bearish because it fell below the 2-day 200 moving average cloud (around $97,000 in early November), confirming a trend shift that occurred in mid-2022. Bitcoin currently acts as a speculative risk-on instrument, moving in lockstep with speculative software stocks (like IGV) and ARK (ARCW), rather than functioning as digital gold right now. Caleb Franzen's line in the sand for flipping bullish on Bitcoin again is a confirmed break above $101,000, which would reclaim the 2-day 200 moving average cloud as support. Retail stocks are trading at all-time highs, indicating solid risk-on dynamics, especially as they outperform consumer staple stocks.

Context: The host John Gill interviews market strategist and analyst Caleb Franzen, founder of Cubic Analytics, on the Milk Road Macro podcast to discuss current market dynamics, contrasting strong equity performance with weak investor and consumer sentiment, and analyzing divergences between US and global liquidity, particularly focusing on the recent behavior of Bitcoin relative to broader stock indices.