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. How Is Our Media So Bad at This? (Chart Party)We just had our best Thanksgiving trading week since 2008... does anyone remember what happened that week in 2008? It was the beginning of a 17-year trend...
Dear Fellow Traveler: Right now, we’re hitting the merge between Interstate 85 and I-95 with caffeine and a Hunter-esque fury… Lisa’s driving… Every time we look at our ETA to Maryland, the clock hasn’t changed. It’s clear that a wall of traffic awaits on the outskirts of Washington D.C. on a holiday weekend, and we’re about to hit the worst time of day to drive this Sunday… 11 am. I’m sitting here looking at charts… and I keep returning to one that is driving me a little wild… It comes from ZeroHedge with Bloomberg data… And notes that we just had the best S&P 500 weekly performance since… 2008 (at the height of the Great Financial Crisis).
Why did we just have the best week since 2008? Ask CNBC, and they’ll quote Zacks Investment Management:
Ask Yahoo! Finance:
Heck… talk to T Rowe Price:
I have to ask… is someone regurgitating talking points from some central outlet? [Editor’s Note: They are… it’s called Reuters…] Well… let me ask this… Does anyone understand how the financial markets work anymore… or are we just ignoring the real elephant in the room here? I find it incredible that there’s little attribution to the visible policy actions of central banks and governments around the globe in the last week... This weekly rally can’t just be about a few statements from the Fed asserting that they might cut interest rates by… checks notes… a whole 25 basis points… It can’t… Because once you actually understand what happened in 2008 and compare last week’s returns to that period… the whole narrative ignites and collapses.
We Topped… Wait… Thanksgiving Week of 2008?Let’s go back to 2008… five days before Thanksgiving. The liquidity hole in the global markets was massive… Citigroup (way to go, Chuck Prince and Robert Rubin) has devolved into the ruination of modern capitalism. The weekend BEFORE Thanksgiving 2008, the U.S. bailed out Citigroup... again. It was a $20 billion injection in new capital under TARP (in addition to funds received earlier), PLUS A GUARANTEE to cover possible losses worth $300+ billion linked to troubled assets. (Citigroup stock famously jumped 58% in a day…) Then, on November 25, 2008, the U.S. Treasury and the Federal Reserve jointly announced the creation of the Term Asset‑Backed Securities Loan Facility (TALF). The program was designed to inject capital into consumer and business lending. So - after two MASSIVE stimulus efforts... the S&P 500 rallied during Thanksgiving week in 2008... AND WE JUST BEAT THAT PERFORMANCE AFTER ALL THAT POLICY SUPPORT IN THE HEIGHT OF THE GREAT FINANCIAL CRISIS? Is anyone… at the desk of all these media outlets… HOME? Here’s a short reminder of what’s happened in the last week…
And that’s just what’s public… In this game, prices don’t move because people feel better. They move because the pipes fill. And last week, the pipes were gushing. Anyway… we’re not out of the woods yet… Prepare for a squeeze on the dollar, the European Central Bank warns… Oh boy… Now then… Let’s look at MORE CHARTS. Editor’s Note: Postcards from the Edge of the World went live yesterday…
You can sign up for my free weekend commentary, right here. November in ReviewAnother interesting chart out of ZeroHedge and Bloomberg… This is measuring the Goldman Sachs High Beta stock performance for November… Turns out… it was the worst month for high-beta, momentum stocks since November 2023…
Well… this is interesting… If only someone had warned that broader momentum (from the Russell 2000) had turned negative… and has stayed negative since… October 30.
Just a reminder that if you’re a momentum trader… or invest in higher-beta stocks, you need to pay attention to our readings. If you’re reading other newsletters that are recommending these high-growth stocks not linked to the MAG 7, you need to bounce it off our readings and wait for things to turn Green again. The Russell is still in negative territory on our reading, but has recovered this week on the squeeze we projected last Sunday. The next stop is to see if this recovery is sustainable… or if the underlying economic woes push the Russell to a level lower… Be sure to join us… Google Takes the LeadHere’s an interesting chart that helps me formulate my thesis… Alphabet (GOOGL) has emerged this year as the top driver of S&P 500 performance. It’s contributed to more than 19% of the index's gains…
Now… everyone can get into the AI debate and chatter on and on about profits… But let’s look at the structure of the financial markets and their participants. There are nearly 1,700 ETFs that own Alphabet… and passive flows are buying up Alphabet regardless of its profits… It’s doing so for reasons like benchmark replication or to follow a thematic element… Passive flows now account for over 50% of the market… Then, you have the leveraged hedge funds - that buy Alphabet for a different reason… They don’t worry about earnings quality… They worry about collateral quality and their ability to leverage their positions in highly liquid equities like Alphabet. And then you have the value investor - the Warren Buffetts of the world - that have seen their dominance of investment flows in the 1990s wane significantly… The structure and source of flows have changed dramatically… But Alphabet suits the investment strategies of ALL THREE of these primary investment groups… The positive news on chips and Warren Buffett's support are additional fuel that compounds on top of the system’s flows… If this feels like a feedback loop… it is. It’s just not been a subject of much conversation because people don’t appear to be seeing it for what it is… To do so would upend decades of CFA, MBA, CAIA, Series 7, and countless other education programs that look at markets the same way… And we can’t have that… there’s too much money in groupthink. Silver Continues to RallyWe just had a significant technical break in the gold-to-silver ratio, which has many metal investors smiling. The crack in this technical line has some calling for $100 silver due to ongoing supply constraints…
An interesting theory emerged on Friday morning from the Reddit crowd and the silver bugs. Some argued that the CME blackout wasn’t a data issue… They believe that silver’s run to all-time highs is the reason for the move - and they continue to argue that there’s an effort to suppress silver prices… Regardless, we’ve remained very bullish on silver since our March 2024 recommendation of $25 per ounce in our Hedge of Tomorrow report. As we’ve said repeatedly, all signs point to more monetary inflation ahead… and silver is a cheaper hedge against currency weakness for the average person. A Reminder on Insider Buying… One other thing that we didn’t note above was that not only did we see a lot of policy efforts to stabilize the financial system… but it all aligned with a sharp uptick in insider buying in relationship to selling in real dollars. This chart from SECForm4.com showcases that the insider buying-to-selling ratio hit its highest levels since April.
The blue line is the 5-day moving average… and it spiked just as Japan was announcing stimulus and this market’s squeeze kicked in. This is something that I discuss all the time here on this Substack… But we’re expanding our coverage on Insider Buying by opening up our letter, The Insider Buying Report, to new readers. This has been a well-kept secret among readers in the last two years… If you’re interested in joining the service, it features an update on insider buying every morning, notes on what buyers are doing, and an active portfolio of trades and recommendations. You can see Friday’s letter right here… Black Friday pricing still stands for readers… Finally… Isn’t Financialization Great?Here’s your K-Shaped recovery in one chart… Stocks are bouncing back (green line), and consumer sentiment (red line) is in the gutter…
The green line reflects the small sliver of Americans who own the bulk of the equity markets. The red line is everyone else… sacrificing… Isn’t it wild that the solution to all this appears now to be stimulus checks?
According to prediction market site Kalshi, the odds that the U.S. government sends out stimulus checks by next summer is now over 60%… You do that… and the green line goes higher… and the red line stagnates… As always, watch the liquidity… It’s the only thing that never lies. 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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