5 calls we’ll grade in public…

Today’s Big Picture

The third quarter ends today, and four numbers tell you what actually happened…

• Bitcoin rose more than 40%, its best third quarter since 2017. 
• The S&P 500 gained about 2% and sits roughly 1.6% below its August record. 
• The Dow slipped about 2%.
• And the 10-year Treasury yield closed Tuesday at 5.26%, up more than a full percentage point since January and near its highest since 2007. 

That last number is the one that carries into Q4.

When a Treasury pays 5%, every other asset has to explain why you should own it instead.

This morning’s inflation report came in softer than forecast, and traders cut the odds of an October rate hike to about 47%. Read Signal vs. Noise before you celebrate: most of the drop came from how the government measures prices.

Below, instead of a guest, you get me. 

On the last day of every quarter, I’ll make five calls for the next one, attach odds to each, and grade them here when the quarter ends. 

Today is the first.

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Signal vs. Noise

Inflation Cooled on Paper

• The noise: inflation fell to 3.4% in August, against 3.7% expected.
• The signal: most of that fall came from the ruler. The government’s annual revision changed how it measures prices and pulled July down to the same 3.4%, so like for like, inflation held still.

On Monday we told you to check whether the revision did the cooling. It did most of it.

The real news is smaller and still good: prices rose 0.3% in August, and 0.2% excluding food and energy, each a tenth below forecast. That was enough to cut the odds of an October hike to about 47%, from roughly 71% on Monday.

One cool month doesn’t make a trend, and inflation is still well above the Fed’s 2% goal.

Americans Say They Feel Worse. Their Spending Disagrees.

• The noise: consumer confidence fell to 81.9, the lowest in more than 12 years.
• The signal: what people did with their money. Spending jumped 0.9% in August, 0.6% after inflation. The government also revised second-quarter growth up to 2.2% from 1.5%.

Private employers added 90,000 jobs in September against forecasts near 70,000, though job openings slipped to 7.08 million. For beginners: surveys tell you how people feel, and spending tells you what they do. When the two split, the Fed watches the wallet.

The government’s September jobs report lands Friday, and it’s the next test of which one the Fed believes.

The 30-Year Just Reached a 2002 Level

• The noise: stocks shrugged Tuesday, with the S&P 500 down less than 0.2%.
• The signal: the long end of the bond market kept climbing. The 30-year Treasury yield closed Tuesday at 5.59%, and CNBC reported it reached its highest level since 2002.

New York Fed President John Williams said one more hike “may be appropriate late this year,” which is why October odds fell. The Fed can take its time on the next move while long-term borrowing costs keep rising on their own.

For beginners: the 30-year sets the tone for mortgages and other long-term borrowing. When it climbs, the monthly cost of long-lived things like houses climbs with it, whatever the Fed does next.

Micron reports after the close tonight, with its customer deposits still the line worth reading.

Featured Contributor

Today’s featured piece is mine, Rami Al-Sabeq. On the last day of each quarter, I’ll make five calls for the next one, attach odds to every call, and grade them here when the quarter ends.

Nothing here is a recommendation, and some of these calls will miss.

The Price of Waiting: Five Calls for Q4

For most of the last 15 years, holding cash paid you almost nothing. That made it cheap to own things that also pay nothing: gold sitting in a vault, Bitcoin sitting in a wallet.

That math has flipped. 

A 10-year Treasury pays 5.26%, and the Fed raised rates two weeks ago with more on the way. Every dollar parked in gold or Bitcoin now gives up about 5% a year in guaranteed income, and investors notice.

So here’s the thesis for the quarter:

A guaranteed 5% pulls money out of Bitcoin and gold. If rates keep climbing, that pull becomes a squeeze.

This is a call about the next three months. Our long-term view on digital assets hasn’t changed, and the pressure a single quarter brings is a separate question from the value a decade builds.

Each call below has a base case, the outcome I expect, and a tail, the bolder version with lower odds. The base cases are the official record.

1. The Fed isn’t done.

This morning’s softer inflation numbers, and New York Fed President John Williams pointing to a hike “late this year,” pushed the odds of an October hike below 50%. So my call is about direction: whether the Fed moves again this year, at whichever meeting.

• Base case: the Fed raises rates at least once more before year-end, about 85%. 
• Tail: it hikes on both October 28 and December 9, ending 2026 at 4.25–4.50%, about 35%. 

Four of the 18 Fed officials already penciled that in last month.

2. The 10-year ends the year above 5%.

It closed Tuesday at 5.26%. The 10-year hasn’t finished a year above 5% since the early 2000s, and a Treasury auction calendar this heavy makes the case that it will.

• Base case: it ends 2026 above 5%, about 65%. 
• Tail: it touches 5.5% before December 31, about 40%, a level it hasn’t reached in roughly 25 years. 

The date to watch is November 4, when the Treasury announces how much it plans to borrow next quarter.

3. Bitcoin flushes below Strategy’s cost.

Bitcoin gained more than 40% last quarter and sits near $83,800. I expect one more flush before the year is out.

• Base case: it trades below $75,000, about 55%. That’s under the $75,437 average price Strategy paid for its 847,666 coins, which would put the largest corporate holder underwater, if only for a day. 
• Tail: below $70,000, about 30%, a level Bitcoin last saw on June 2.

4. Gold breaks $4,000 again.

Gold trades near $4,180, roughly $1,400 below its January record. When holding it costs you 5% a year in forgone income, it needs a reason to rise, and the Fed isn’t supplying one.

• Base case: it trades below $4,000 before December 31, about 65%, a line it first broke in June. 
• Tail: below $3,800, about 35%, which would be a new 52-week low.

5. The dollar finishes the year above 100.

The dollar index sits near 101.4, up about 3% this year after its worst year since 2017. Money chasing 5% has to buy dollars first. Yesterday, Frank Trotter made the case that a portfolio held entirely in dollars is a bet that cuts both ways.

• Base case: the index ends 2026 above 100, about 60%. 
• Tail: it touches 104, above its 52-week high of 101.80, about 30%.

How this potentially goes wrong

All five calls rest on one idea, so they can miss together. 

A weak jobs report Friday and a soft inflation reading before the Fed meets could delay the next hike, send yields back under 5%, and let Bitcoin and gold run.

At these odds, I expect three or four base cases to land. A forecast without odds is impossible to grade, and I’d rather be graded.

The scorecard, graded December 31

• The Fed. 
• Base: at least one more hike by Dec 9 (~85%). 
• Tail: hikes Oct 28 and Dec 9, ending at 4.25–4.50% (~35%).

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• 10-year yield. 
• Base: ends 2026 above 5% (~65%). 
• Tail: touches 5.5% (~40%).

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• Bitcoin. 
• Base: trades below $75,000 (~55%). 
• Tail: trades below $70,000 (~30%).

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• Gold. 
• Base: trades below $4,000 (~65%). 
• Tail: trades below $3,800 (~35%).

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• Dollar index. 
• Base: ends 2026 above 100 (~60%). 
• Tail: touches 104 (~30%).

- Rami Al-Sabeq

Editor in Chief | Future Finance

Tan Graded His Own Quarter. The Misses Are in There Too. 

Every quarter, Tan Gera grades two things in public: what the market did, and what he did.

This quarter's report card goes out today at 3 p.m. Eastern in The Macro Letter. A Bitcoin buy at $62,000, set weeks in advance, filled on July 1, the day of the quarter's low. In August he sold gold at $4,500, and on Monday he bought it back at $4,350. His four signals started the quarter at zero and finished at four.

The misses are in the same issue: a line he drew half a point too high, and a $77,000 level Bitcoin missed by $162.

Every level was written down before the market reached it and graded where readers could see it.

Read the quarter, graded →

Final Thought

The hardest part of making predictions in public is showing up three months later to read them back.

Most financial media skip that step. Calls get made, markets move, and nobody checks. We will: the December 31 issue opens with this scorecard, hits and misses in the same font.

Until then, the quarter starts tomorrow with a jobs report on Friday. And tonight Micron reports, with the deposits Dylan told you to watch

See you tomorrow.

- Rami Al-Sabeq

Editor in Chief | Future Finance

The Headline Is Where The Story Ends. The Research Is Where It Starts.

Every month, millions of people read one inflation number and think they understand the market.

You already know it is more complicated than that.

The real edge is one level beneath the headline, in the assets and setups most people never see until they have already moved.

That is the whole job of Gems Uncovered, our research on the early opportunities ahead of the crowd.

The headline is where the crowd stops looking. That is where the work begins.

See how it works right here…‍

Disclaimer: This content is not financial advice, it is for informational purposes only. All investments involve inherent risk. Any financial decisions you make are solely your responsibility.