GM. This is Milk Road, the daily newsletter where once a week we let John take over to talk macro and say things like Money Laundering should be called Dollar Warshing now.

Here’s what we’ve got for you today:

✍️ Bad breadth.
✍️ Ahh, the economy.
🎙️ The Milk Road Show: How Maple & Robinhood Are Silently Onboarding Millions to DeFi.
🍪 Novogratz: Trump was a double-edged sword for crypto.

Securitize is the platform institutions trust to tokenize their assets onchain. See what nine years of regulated tokenization looks like.

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BAD BREADTH

WELP…

The headline posture of The Milk Road Macro Index has crossed below zero.

We’re coming in at -0.04 (CAUTION). This puts us pretty far away from the indicator recommending a full RISK ON posture.

Source: Milk Road Macro Index

The move is entirely a market story. The falling market momentum we warned about last week continued falling this week.

To be precise, the market momentum fell to +0.24 as breadth broke below 1.00 to +0.73.

Source: Milk Road Macro Index

See that big red number on the 30D column for Sector Breadth? The one that says -125%?

Yeah, that’s what we macro analysts call “bad.”

Chip stocks staged a tentative bounce but not broadly enough to restore participation.

The economy, however, moved the other direction.

THE RAILS BEHIND BLACKROCK'S ONCHAIN FUND

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AHH, THE ECONOMY

The stress score fell sharply to +0.51 as inflation direction landed at exactly +0.00. The six-month core CPI trend went flat and initial jobless claims dropped to a 10-week low of 208,000.

This left the macro buffer firmly near its practical ceiling.

Source: Milk Road Macro Index

The divergence between the market pillar and the economy pillar is now as wide as it has been.

The economy is making its maximum contribution to a bullish posture, while the market side continues to erode it. The overall recommendation is holding at 75% exposure, not because both pillars agree, but because the economy is preventing a further drop.

Alphabet reports tomorrow, and the window has tightened considerably. A strong Google Cloud result with firm CapEx guidance could, maybe, possibly, be a path back toward bringing bullish momentum back to the market.

However, any equivocation on AI spending would hit the growth impulses and breadth together, sort of kicking the market when it’s down, so to speak.

This would likely push the posture deeper into negative territory and increase the chance for a deeper correction in the near term.

At that point, it’s not entirely obvious to me right now what the next market stabilizer would be.

Iran war ending? Unlikely to move markets.

Tesla beats earnings? Meh. Sort of priced in.

Beyond earnings, the Fed’s FOMC meeting next week could bring a surprise. After that, any re-acceleration in goods or services prices when July CPI prints on August 12th would really scare the market into believing a rate hike was coming ahead of midterms.

With the market already under pressure, seeing inflation come back and pulling the economy down too would be a very bad sign.

HOPIUM:

I don’t want to sound TOO bearish here, but I do think it’s important to flag these very real reasons for caution.

My take is that we’ve just seen a huge wave of leverage and speculation on semis that has needed to unwind and cool down a bit. It seems like that has finally happened. It’s just not clear yet how deep this correction will go.

In the meantime, the economy is holding strong, and, once this AI trade digestion clears in the markets, there’s a strong chance we see the bull run continue into year-end.

What about crypto?

Well, I think Bitcoin and crypto are nearing the end of their bear markets, and they might perform surprisingly well going into year-end. It’s clear that Bitcoin is finding its footing, and a surprise passing of the Clarity Act could ignite the next bull run sooner than many expect.

But we’ll deal with that once the bill becomes law.

If you want to see how I’m planning to deal with that, you can join Milk Road PRO for just a buck (!) to see where my buy orders are set and which altcoins are on my watchlist.

Until then, stay safe, stay educated, and stay bullish! (we do recommend some caution rn tho frfr.)

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**this is partner content.