You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Everyone's Got Opinions (Here Are Friday Facts...)From an Everything Bubble to a rather stunning development in Mexico...
Dear Fellow Traveler: Well… that went sideways… huh? After a strong week of tech momentum, there was a sudden shift in expectations… While I have a hard time thinking this will last too long… There’s that sudden profit-taking that meets a narrative shift…
Today, it was all about China and more AI “noise…” Marvell’s earnings report didn’t help (18% drop in shares today)… Dell was hit with a downgrade on guidance despite a relatively strong report… But there are the bigger stories that arrive from The Journal. China’s trying hard to get away from Nvidia and U.S. semiconductors. Huawei is feeding DeepSeek, so we’re getting a little more of that “bipolar world” that we are signing up for. Additionally, the White House is encouraging US companies to manufacture here, rather than in China. So, we have our blend of politics and earnings reactions… I’m sure this will be another generational buying opportunity for NVDA… Right? Keep your eye on the SOXL…
It started barreling to its 50-day Exponential Moving Average today… If there’s an overreaction, pray that semiconductors get oversold on the Relative Strength Index and Money Flow Index (30 and 20, respectively) Then sell “credit spreads” to the downside… I don’t know too many people who aren’t hoping for a September pullback… Where Is The “Bubble”, Really?"We're in an everything bubble." That’s the lead I got out of Seeking Alpha yesterday… I've heard this every day… for years. From people who sold Apple at $15. Who've been in cash since 2011. The calls sound like this…
They’ve missed the greatest wealth transfer in history because they're using 1929 logic in a 2025 market. The reality is that the game changed in 2008. Central planning became the norm through monetary policy… Every liquidity event has been met with accommodation. Because in the post-Ben Bernanke world at the Fed and other central banks - the real mandate isn’t inflation targeting or maximum employment… It’s financial stabilization… at pretty much all costs… Even societal… A reminder of how good Paul Giamatti was as Ben Bernanke in Too Big to Fail… And the basis of everything we see today in policy…  [Note: When you watch this… Interestingly, he sounds exactly like Heath Ledger’s version of The Joker - in both cadence, voice, and mannerisms.] Back then, the Fed discovered the power of infinite printing. Everything is inflated… because of the Money Printer (a euphemism for loose fiscal and monetary efforts)… and because there’s an entire world of liquidity that a lot of people won’t accept as fact… If you want to say something like this, I could agree… that maybe the U.S. is the bubble. And that the growth of U.S. debt is part of the equation here…
Since we started pumping liquidity into the system in the last 15 years, QE and these pro-growth stock market outcomes have sucked more money back into the U.S., which feels like a paradox… because it is… I explained how we’ve behaved since 2008… and I don’t expect things to change…  Will there be another crash? We’ve had a few major ones in the last six years, but central banks fear deflation; they allow leverage through the Basis trade and pump U.S. debt issuance into the cryptocurrency markets… They won’t allow massive defaults or deflation… They’ll keep doing this… I explained it all after the Nikkei Crash last year… Ultimately, it will create serious problems that may even lead to revolution. But not today… Took about 70 years to go from the Mississippi Bubble to the French Revolution… When liquidity's flowing, momentum's building, and insiders are buying, you ride the wave. Then, ensure that you allocate some gains to real assets, which will also appreciate because the money is worth the cotton it’s printed on in the long run. This isn’t complicated… Stop trying to make it complicated… More Signs of BRRRR…I couldn’t help but notice that America’s top Buy Now, Pay Later company has absolutely ripped into the stratosphere. Sign of the economy that Affirm (AFRM) popped 10% on earnings news? Or is it a result of liquidity cycles? As I’ve noted, the markets loved Affirm at the backside of the 2021 rally. Michael Howell’s cycle peaked at the time… And then, the slow death march of 2022 began - higher rates, tighter conditions... Affirm has been hit every time the signal has gone negative in recent periods, rolling into trouble during the Nikkei Crash and contributing to the excess liquidity drain that exacerbated the 2025 trade crash. Then… what happened? The Fed adjusted its QT program again, the Treasury shifted more focus to T-Bills, trade policy was canceled, and economic conditions continued to loosen. So, it’s no wonder that Affirm has become what it really is… a stock front-running liquidity expectations. And if you don’t think that’s the case… consider this thing imploded alongside so many other credit companies on the backside of 2022. When the cycle bottomed out, it left behind a wake of nearly dead consumer credit companies - Affirm (AFRM), Lending Club (LC), and Carvana (CVNA)… What have been the returns of these stocks since the start of the 2023 upward liquidity cycle? Affirm is now up 869% since the end of 2022…
Carvana is up 3,610%…
And Lending Club… well… just 78%… As if that’s bad… ha… But you get the point… It’s not because they’re great, world-changing companies… It’s the loose economic conditions… This isn’t a coincidence. Remember - next time the markets collapse, insiders start buying stocks, a policy pivot happens, and momentum returns… Buy Affirm. Even if you don’t want to… And don’t worry… it will collapse again…
But not yet! The AI LoopholeI think the bigger AI story today wasn’t around China… It was south of the border… Big Tech found a loophole in Mexico. Can't build data centers in California because there's no power? Move to Querétaro. Microsoft, Amazon, and Google are pouring $10 billion into Mexican data centers over the next decade. Why? The U.S. power grid is hitting capacity constraints... AI needs electricity. Mexico has power, cheap land, and politicians who to do business. But there’s something else that has fallen under the radar… Data centers don’t just suck up power… They suck up TONS of water… Google alone sucked down 8.1 billion gallons last year, a 28% annual jump. That's for cooling servers so ChatGPT can write your emails. The locals get the jobs. Big Tech gets the power. Mexico gets the investment. And when drought hits? Well, servers need water more than people need showers, apparently. Welcome to AI's colonial era… Same extraction patterns… just a different century. Finally - Thank You…Some exciting news after a really difficult June and July… In August, Me and the Money Printer received a lot of recognition and gained new readers… and we’re very thankful to everyone for signing up and being part of this community. Today, this letter reached No. 3 on the Rising Bestsellers in Finance list.
Thanks to our supporters and subscribers, we look forward to building this audience independently in the future. I hope you’re entertained… and you’re getting a lot out of this too… That’s one reason to… Stay Positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
|
Post a Comment
Post a Comment