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Dear Fellow Traveler: I was sitting at the kitchen table this morning… my daughter was doing the dishes… Turns out that I can outsource my chores… It will cost me $10 today to have her do the dishes and wash the dog… While that might seem steep, this is solid arbitrage to start the day… That’s at least 2 hours of labor at below-market rates… and Maryland's minimum wage is $15.00. Watch me get sued… There are things that I don’t want to do… and then there are opportunity costs… I’m much better if I’m doing market commentary… instead of being irritated by chores.
Chart 1: Don’t Go to the Post OfficeAs I think a tad about the market… I am not expecting this selloff to go too much deeper. But… this is why I follow the math equation… and not my own gut. Of course… there’s a single catalyst on which all of this relies… We bounced off the 50-day moving average on the S&P 500. The FNGD is gaining, but it’s still under its critical moving average. And we had a snap-back on Friday that is still haunting my dreams. I spent 105 minutes in a chat room yesterday talking about NVIDIA… and I said that the very second that the 24-minute EMA crossed the 60-minute EMA, the stock would rally. I had to go to the post office before it closed… Then… it happened… Orange line over pink line… compounded by blue line…
NVIDIA $180 calls went from about two bucks to $8.15… and the $180-$182.50 call spread that I recommended but wouldn’t buy until that line crossed went up 60% in the time it took me to drive to the post office… I missed it… That could have bought a LOT of baseball cards… But I’m happy that the people who stayed in the room with Scott killed it… This is a very technically driven market… You must think like an algorithm. You must be patient. You must wait for a setup… You must stop selling things on eBay that require you to go to the post office… I know that people mock day traders… but success is possible if you follow rules and only make moves based on structure. Setting tight stops and admitting to yourself that there is a lot of luck in this fortune… I also sold those SH calls that I discussed the other day… at 62% and 75%…. And the SQQQ hero trade went up 218%… Take gains… I’m still short the dollar… and I feel pretty good about it… That’s up big because the UUP is the greatest vehcile in the world for dollar trades… All that said… the market is likely to rebound when the government reopens… There’s a reason for this… Chart Two: Son, Son…The Treasury General Account has been a HUGE drain on the system’s liquidity. It’s operated like a hurricane sucking water out of a bay. Well… it’s about to flood back… and it will do so… strongly…
The natural tendency will be for institutions to lever up and buy NVIDIA (NVDA) stocks worldwide… and that makes sense given the way markets have worked post-COVID.... But I’m telling you that it’s time to focus on capital-efficient businesses and assets. I’m building a list for tomorrow… and I’m adding names like Domino’s (DPZ) and Toast (TOST). The latter is funny… I don’t know a single person in the restaurant business who liked using Toast software when it first started... People were so used to old school platforms… But… they came in… undercut everyone… and now… people who were skeptics are now saying… “Yeah. It doesn’t break. It doesn’t freeze.” I’ll take complacency in software platforms ALL DAY. “It doesn’t suck” is a reason to go long… We’re still a little ways from the top on the liquidity wave… I am not gonna get bearish until late 2026… Right now… the number of major emerging and developed market stock indices is at an all-time high…
And that chart is interesting when you layer it over with the liquidity cycles…
I wonder… what’s going to happen next? Chart Three: Why The Fed Won’t Cut… (Yet)Here’s an alternative data source… Truflation… It has inflation at 2.69%. Whoops… That seems … whoops…
This is why a cut in December would be a wild one… The point I’ve made time and time again is that the Fed is very happy to enable asset inflation… but drive up the cost of key living expenses, and people pay attention… No one in power gives a shit about the bottom 90% of American consumers right now… (Except for the ultra-leftists who care, but have really bad ideas… and the libertarians who will NEVER take power and can’t unwind a Keynesian system…) Just to be clear and tell you how I really feel… Consumer sentiment is in the dumpster… but the S&P 500 keeps going higher… This is the great disconnect of a financialized economy… Look at the relationship between consumer sentiment and the stock market…
There isn’t one. Politicians don’t care… I am reminded of something that happened in 2014… Back then, Gallup (or someone like them) did a poll measuring economic satisfaction in every state and Washington… On a scale from -100 to 100… each state had a rating. The No. 1 state at the time was… North Dakota. That’s because they were in the middle of an oil boom… And the rating was somewhere around 20… Then they polled Washington D.C. The Washington D.C. rating was PLUS 95. The people in D.C. were so disconnected from the rest of the country that they wondered why anyone was complaining. They were too busy benefiting from the government boom and the second round of Quantitative Easing… The Fed might not be expanding its balance sheet (yet), but the markets are benefiting from the continuation of Mnuchin-Yellen-Bessent short-duration issuance (U.S. debt is issued in short-term debt instead of long-term debt… which increases liquidity, leverage, and doesn’t suck capital out of the system.)` Well… that’s the issue. The people in charge are doing great right now because the market goes up and the Treasury keeps BRRRRRING… But the underlying economy - the parts that aren’t financialized - are cracking and consumers are starting to get pissed. All the while… look at what the wealthy are up to… Chart Four: It’s Good to Be the KingLuxury spending jumped 8% annually… The rich are propping up the economy…
If this cracks… that’s when the Fed will start QE. We’ve reached this point of our own undoing after we started QE back in 2009. This isn’t trickle-down economics… It’s centralized planning on steroids, and no one realizes that this is the source of so many problems in this nation… This chart is a major contribution to the political shift we have seen in recent days… People think this is a left-right issue. It’s not. It’s an up-or-down one… Look up… the Fed and Treasury are “dropping money” from the sky, and only the privileged few get access to it…
Then we’re supposed to write thank-you letters to these people for their economic prowess… I do my best not to think about it. I’ve taken up watching movies… and also very, very, very hard ciders. HALFTIME…Time for a movie review. As you know, I’m watching a new movie every night of December… that I’ve never seen before. Last night? North by Northwest… Here is my haiku, review…
Next Up: Parasite. Chart Five: Don’t Do ThatI’m a huge fan of Syz Group in Geneva, Switzerland. They put together one of the best weekly market recaps. However, because they can’t technically market to the U.S., they have to post their reports on LinkedIn (they can’t email here, apparently…) This chart was in their weekly recap…
It’s the S&P 500’s performance against the Fed’s balance sheet. Here is their commentary…
No… No. No… No… NO…
“Dependent on QE to rise…” First… we’ve had a form of QE though… it just wasn’t the Fed doing it… It was the Treasury… Two, there was a massive correlation between QE between 2009 and 2014… And it was strong from 2014 to 2020… When the Fed dropped trillions from the sky in 2020 via open market operations… markets went up despite the economy being closed… Three… what has happened in the last three years that has fueled the S&P 500’s rally? An expansion in global liquidity… and the Treasury issuance that has helped fuel leverage. This was the missing puzzle piece that completely shifted my perspective on how this entire system works—and it was Michael Howell’s work. This is a chart of Howells showing that the Fed and the Treasury were quite active in helping provide supportive policies on the backside of the GILT Crisis and the Silicon Valley Bank crash…
This chart showcases everything that you need to know about the support on the backside of the GILT Crisis… and we saw very loose policies from the central banks around the world. And as we look out into next year, the expectations are more support through the short duration of bill issuance, which has a massive leverage effect in equity markets.
This chart above is likely why we’ll hit new all-time highs in 2026… Now… why am I saying this with conviction? I recall thinking the S&P 500 would fall from 3,800 to 3,250 in 2023 because of the relationship between the Fed’s balance sheet and the S&P 500… But then, after reading Capital Wars and Howell’s article in the Financial Times… I shifted my opinion and went long. I’m telling you… The shift from the Treasury has provided ample cover for the Fed. The Fed is about to loosen operations at some point. When that happens… BUY STOCKS I have other things that I want to say… But I’m going to keep them to myself right now. If you can’t say something nice… 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.
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