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Good morning, everyone: Check out the new light… Today, we kick off Fed Week (and St. Patrick’s Day week) with a 40-minute dive into the major risks in the global financial markets. There is a transcript of the recording after my signature at the bottom for those who like to read.
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It’s all about building conviction in an environment like this… I hope you all have a great weekend… Time to go finish Postcards from the Edge of the World. Stay positive, Garrett Baldwin Here’s the clean transcript: Transcript, March 15, 2026Hello everybody, it is Sunday, March 15th. I hope you’re doing well and pretty good. I hope everybody’s having a good weekend. We are hanging out today, we’re doing a little bit of a special Sunday conversation. A couple of things I want to walk you through. This is a very important week that starts for the markets. We have the Federal Reserve meeting, we have the Bank of Japan meeting, we have a lot of questions about earnings. And there’s nine different threats going on right now in this financial system that warrant your attention. Some of them you’re going to know about, others you may not. And it’s very important to kind of dig through this confluence a little bit so that you have a deeper understanding of what these risks are, what these threats are, and why ultimately one day all roads point to more money printing. But today, as we dig into this, this is really just about risks, understanding the systemic risks, understanding where we sit with momentum. We’re going to talk a little bit about triples, triple momentum. We’ll talk about our reading, but we’re going to dig into each of these risks because it’s very important that you understand how each operates. I’m going to take probably three minutes with each one. The first one that I want you to really be focusing on is this SOFR repo plumbing story. Now, as you know, I wrote the other day about this, and I explained that everybody’s hyperventilating about the Fed funds rate that comes out on Wednesday. The Fed will decide whether or not to raise or cut rates. And yes, they’re not going to cut rates. We’ve already seen this, the odds and the probability of a rate cut currently sitting just 1.9%. We have to go out to December, actually, to really start to see the market, quote-unquote, pricing in a little bit of a rate cut. But here’s the thing, here’s the dirty secret. The Fed funds rate doesn’t really matter anymore. SOFR, which is the Secured Overnight Financing Rate, which impacts the repo system — there is $12.6 trillion notionally exposed every single day to that rate. Back in December, it spiked. $75 billion had to be pumped through by the Federal Reserve through the standing repo facility usage, and the SOFR contracts linked to it are over $200 trillion. By comparison, the Fed funds rate, this whole thing that we’re doing on Wednesday, $80 to $120 billion. So 12.6 trillion notionally, $2 trillion a day in repo transactions. Fed funds rate, just about $100 billion. And here’s the fun part. This rate has nothing to do with much anymore. In fact, a huge share of the Fed funds lending is not even banks lending to banks anymore. It’s the Federal Home Loan Banks lending to foreign bank branches running an arbitrage trade against interest on reserve balances. So the interbank market the Fed targets consists of a government-backed housing lender financing carry trades for international banks. And if it sounds weird, it’s because it is, and not ha-ha weird, but call your therapist for more details type of funny. The SOFR and SOFR-linked benchmarks underpin, again, $200 trillion. That entire system refinances on leverage every single morning, and there is no grace period. Again, we saw that spike to 3.87 in December. That fueled that big pump into the standing repo facility. The FSB has flagged leverage concentration and rapid shifts in lender behavior as structural vulnerabilities in the repo market. We’ve seen multiple incidences going back to October where the Federal Reserve had to provide support. And that’s on top of the 40 billion to 55 billion that they’re pumping into the system to help manage reserves right now. If the SOFR spikes and stays elevated for even a few days, everything reprices in real time. It creates incredible stress. And the SOFR, which is funding that is using collateral, should not be above a non-collateral interest rate. That would be like your local pawn shop charging more than the local mob boss if you were going to get a loan. Not good. On top of this, we have the treasury basis trade. You’ve heard a little bit about this, but this is one of the areas of finance that you don’t hear a ton about. Sorry, on CNBC or anywhere else. Notional positions are around a trillion dollars in leveraged treasury basis. And what they do is they go out, they get treasuries, they go back to the repo market, they borrow money to buy more treasuries, and then they take it back to the repo market, use that as collateral, and then go buy more treasuries with the money that they get. And about 64% of those transactions have no quote-unquote haircut. So this is something that benefits the bond market. It keeps interest rates a little bit lower, and hedge funds are borrowing to arbitrage the treasuries against futures positions. Their profit margin is very small, it’s only one to five basis points. But if funding costs spike, they have to sell those treasuries, which creates more margin calls, which creates a reinforcing loop. No single regulator sees this full picture at all. And when Janet Yellen was confronted about it by the Australian Financial Review, she noted that leveraged funds were selling U.S. Treasuries, but she was never asked why. And that’s the key thing, the why. We don’t talk about the why. All of this stuff is funded overnight. It goes through repo, through SOFR. The deeper concerns remain the same. Razor thin margins mean that even a small spike in overnight rates can force liquidation. We saw this happen in 2008. We saw it happen in 2020. And that has to be another concern right now because the forced selling of treasuries drives collateral values down, which leads to more margin calls. And that’s where you get into that environment where stocks and bonds both start to lose their value at the same time. It’s basically where correlations go to one. And there’s really nowhere to hide. And virtually every single time that something like this has happened, there has been a major policy accommodation. Private credit is back in focus, and we know private credit because I have not shut up about it for the better part of six months. This is a $2 trillion market that is largely unregulated. There are no leverage caps, there is no public disclosure mandates, and regulators can’t see the full scope of the deals being done. Right now, several of the large managers are limiting or gating redemptions. BlackRock, Blackstone, Morgan Stanley, they’ve all limited or gated redemptions, meaning people trying to get their money back through these private credit vehicles. Gating is important. When a fund gates, it sends a message to basically every investor in every similar fund that is out there that their money might be locked up too. And that triggers a rush for the exits on the other vehicles. Fund managers who have to raise cash start selling whatever they can rather than what they should, I guess would be the better way of putting that. And performing loans can get marked down because there are no buyers at par, which is what these things are marked to in their model. Other funds holding similar assets can see the markdowns. And their investors start submitting redemption requests on their own too. And this is a self-reinforcing spiral every single time. Cliff Warder was only expecting about 7% redemption requests. They had 14% in the last most recent redemption window. Morgan Stanley, 11%, and they only fulfilled 45% of those requests. And this can create new confidence problems in these types of vehicles and these types of assets. It’s important to go back and look at 2008. That’s why we’re starting to see these comparisons to 2008 by some analysts, because this played out in June 2007 when Bear Stearns gated two hedge funds that were exposed to subprime. And everybody said that this was contained. And 14 months later, Lehman Brothers was gone. And roughly eight months later, Bear Stearns got sold for the price of a hot dog to J.P. Morgan. You may remember the commercial real estate panic back in 2022, 2023. People were looking at interest rates and they were deeply concerned that rising interest rates were going to lead to problems in commercial real estate. Forget about all of the white-collar job losses. Forget about cities that have been completely and totally destroyed in the wake of post-COVID. People aren’t going downtown as much anymore. They may be working from home, or they may be working in the suburbs. There are $875 billion in commercial real estate that matures this year alone. And the United States has to refinance trillions of dollars of its own debt, which means that the United States, which is considered the risk-free rate if you’re looking at treasury bills and treasury bonds, risk-free rate at the 10-year, then they could potentially crowd out the investment that is needed for this refinancing. A lot of this debt was effectively originated at 4% back in the post-COVID era. It’s now gonna be needed to refinance somewhere near 7%. So that’s almost 75% higher than the original rate. Office commercial mortgage-backed securities delinquency rates range between eight to 12% right now, depending on the source. And regional banks — regional banks are heavily exposed in this space. If we look at our screamers and crashers screen, you’re seeing a significant number of regional banks that are under pressure right now. Some of the big banks are as well. Bank of America has been in a negative momentum pattern for about a week, but it’s a lot of financials. It’s a lot of regional and smaller banks that have this commercial exposure. We’re going to talk about these crashers, what they mean, why they’re important soon. But I can look at this screen right now and tell you every single problem in the economy just by seeing what stocks are breaking down from a momentum perspective. Here’s the chain, okay? This is important. CRE is the top loan category at three out of four regional banks. And extend and pretend, right? Keep extending it, just roll over the debt. That’s ending. Lenders are starting to offload bad loans as property values start to correct. So here’s the chain. When banks start taking losses on commercial real estate, they don’t just take the hit on that one loan. They pull back on all lending. Credit availability tightens for businesses, it tightens for consumers, it tightens for everybody. And the consumer real estate losses feed directly into the same credit tightening that every other risk on this list is also pushing towards. The one that I know everybody knows a lot about is oil and gas. You’ve been watching the war, you’ve been seeing what’s transpiring. Brent crude hitting 100, WTI closing at 98.71. This one hits different because there are two energy shocks that are actually happening at the exact same time. And one of them is already crushing consumers. And now the oil and gas side comes up and really can start to eat into discretionary income. WTI closed above $98 on Thursday. Brent crude soared as well. The Strait of Hormuz has been effectively closed. There is some chatter now that Iran will allow or was considering allowing ships to pass through that only buy in yen, which I’m just going to simply point this out. If they do that, we’re going to bomb them harder because anyone who has tried to shift away from the US dollar hasn’t really gone well. It has been a source of frustration for the State Department for years and years and years. Libya, Iraq, a couple other nations have tried to make that shift, and we have used military force to try to maintain that dominance. It’s a conspiracy theory. No, it’s not. Okay. AI power demands, the other thing. All right, 20% of the world oil disruption. We know that, but we haven’t been paying attention to the fact that AI electricity demand is now 40% of all new US electricity growth. New expected demand growth. Power prices in the PJM region where I live, which is our energy operator, they’re up 15%. Electricity prices were up 7% year over year in 2026. They continue to rise here. And that’s more than double headline inflation, which is significant because you have to pay your electricity costs. This matters for every other risk on this list because it locks the Fed in place. The Fed can’t cut rates if inflationary pressures remain. The financial system typically would rely on this, but energy keeps feeding us more inflation, and rate cuts are off the table through September at the earliest and may not happen in December either. We don’t know. Energy is the input cost that feeds every other chain in this presentation. Higher energy means higher inflation. Higher inflation means higher rates. Higher rates means the basis trade, the CRE financing wall, the consumer, and the yen carry trade all can get worse at the exact same time. We don’t get a lot of chatter about consumer credit much, but consumer credit debts, credit card debts, somewhere around $1.3 trillion, and that’s the highest level since the New York Fed actually started tracking it. Delinquencies are at their highest level since 2017. Auto loan defaults are on the rise. The 90-day delinquency rate on U.S. auto loans is about 5%. Subprime is above 6%, and that’s the highest on record, on record. Total household debt, $18.8 trillion. It’s almost half of GDP, right? More than half. The savings cushion for most Americans is gone. Post-pandemic excess savings peaked at about $2.1 trillion. It was fully depleted in March of 2024. And that’s where we released our Hedge of Tomorrow report because the expectation was they were going to turn on the printer. Lower household income levels have completely exhausted cash cushions. Spending is running at about 4% above the pre-pandemic trend, but it is increasingly funded by credit, not savings. Remember, every time that the Treasury Department creates money out of thin air, every time that the Fed does this, we have what’s known as the Cantillon effect. 20% of that money ends up going to funds and banks and dealers, and they benefit from the money before the inflation hits. By the time it moves through the chain, it usually ends up at the very bottom, lower income Americans, in the form of credit, not as a direct injection of capital, but as an interest rate payment. That is the Cantillon effect. And that is the impact of the Cantillon effect because it keeps people in perpetual debt continuing to cycle, particularly at a time that inflationary pressures run high and debasement maintains its role in the economy. The end of the chain in finance is that consumer. Every other risk we talk about eventually lands on that consumer. So when the consumer breaks, earnings break. And when earnings break, the stock market reprices. The consumer is that last domino. And the consumer is running on credit that is getting more expensive by the month at a time that the currency is continually debased. We talked a little bit about this. I’ve heard that this number is actually 50%. I haven’t been able to confirm that. It doesn’t sound right, but okay. The six largest companies, let’s say 30% of the S&P 500 by weight. The top 20 control 45%. That level of concentration means that what happens to just a handful of companies determines what happens to the entire index and every retirement account tied to it. Remember, all those big top six names, they’re in every ETF. You have ETFs that are tracking the S&P 500. You have ETFs that are tracking technology sector. You have the Catholic ETF, CATH, which basically is just the S&P 500 because whatever their theme was previously wasn’t working, so they just decided to hug their benchmark as close as they possibly could. $1,500 plus for names like NVIDIA and Apple and Amazon in ETFs. That’s a ton of passive investing and passive flows representing at least half of the market. So once again, just a couple of days of bad news and resetting of the weights on those ETFs, that can lead to dramatic downturns. I remind you, because of that concentration, when you have events like what happened in Japan in August 2024, NVIDIA lost 33% of its value from July 15th to August 5th that year. Nothing changed in the thesis around NVIDIA. It was the concentration of NVIDIA and the sheer amount of unwinding of leverage and selling in passive and selling across the board. That panic leads to dramatic repricing and dramatic downturns. 95% of organizations, meanwhile, for all this AI chatter, 95% of them are generating no to little measurable returns so far for their investment. The spending’s real, but the revenue is not showing up. And once again, the passive amplifier is critical. And the math on concentration is significant. A 20% correction in just the top six names drops the entire S&P 500 by about 6% on concentration alone before any broader market selling even begins. Passive fund flows amplify the move in both directions because the same six names dominate the index. And when they go up, passive money chases. And when they go down, passive money sells. A concentrated sector correction does not stay contained. It cascades through the entire index. I’ve been warning about this for — I’m so tired of talking about Japan, I’ll be very honest. But their problems become our problems. And back in April through, I guess it was July, the Bank for International Settlements released a paper basically showcasing that the transmission between the Bank of Japan and the Federal Reserve — it’s like when the Bank of Japan does anything, it impacts us and we impact them. And we’re very tightly aligned. Think of it this way. If your neighbor went and started to change the dial on their thermostat 30 years ago, only the temperature in their house changed. But now, any time that your neighbor does it, your temperature in your house goes up and down when they do something. That is a transmission issue. And the Bank for International Settlements wrote about this extensively last summer. And it’s just a significant warning that the problems in Japan become our problems very quickly. The yen carry trade, for people who don’t know what it is, the 10-year yield is roughly near an 18-year high. And what happened was people would borrow cheap money over there and then invest it here in the United States. Pretty simple. Their policy rate is 0.75%. That’s a 30-year high. We would kill for a 0.75% rate. You have hundreds of billions of dollars in this carry trade still outstanding. Only about half of it was unwound since that scare that we saw. So the carry trade works like this. Investors borrow at low Japanese rates and invest the proceeds in high-yielding assets somewhere. And yielding is subjective, right? It could be looking to try to trade stocks that have high dividends. But we know that a lot of these stocks end up chasing alpha here in the US. They start to chase Mag Seven stocks. So if you borrow at 1% and you generate 15% and then you bring that money home, you pay the 1% back and you pocket the 14%. Investors borrow in yen at low rates. They invest the proceeds elsewhere, primarily U.S. equities and treasuries. Treasuries are important. When the yen strengthens suddenly, it forces a simultaneous liquidation across almost every asset class that that carry trade touches, and then it has an impact on other assets as people start to panic and freak out a little bit. Go back and look at August, July of 2024. That’s where this really cracked the first time. That’s where our signal went negative on August 1st, and then four days later we had the largest downturn in the Nikkei since 1987. And we’ve had multiple panics about the carry trade going back to August 2024. And I would argue that this is likely the most probable source of our stress. We had Japan cause a significant downturn back in November, and then we started to see significant amounts of insider buying and then ultimately stimulus created by Japan on November 21st, and that led to a squeeze in the market. If we are going to get monetary policy support from somewhere, I’m going to assume it’s going to come from Japan, and that could be bullish for U.S. equities for a short period of time because what happens is it alleviates the pressure in the financial plumbing system. It’s not a full-on cure because we just keep moving from one problem to the next. And we’ve seen the S&P 500 volatility index spike six times since 2024, and then policy accommodation happens, and then we see a 40% drop in volatility within 10 trading days. That had never happened before, before 2011. So it’s important to note that one of the reasons why this market feels so weird and so choppy, and we keep seeing these kinds of balances — somebody called it a kangaroo market — largely, policy is doing this, and it’s these very short-term, let’s just throw more money into the furnace to try to keep this engine moving. But eventually, this carry trade, particularly if interest rates continue to rise in Japan, it’s going to unwind, and it’s going to create additional problems in the financial system. U.S. mega caps will always get sold first because they are the most liquid thing to dump when it comes to the carry trade. Actually, treasuries go first and then U.S. equities. Passive flows will amplify that move. And again, that August 5th, 2024, when the Nikkei fell about 12% in a single day, that was only a partial unwind. The next BOJ hike is expected in April or June, and a full unwind forces simultaneous liquidation across equities, treasuries, and emerging markets all at the same time. Sovereign debt. Okay, so on the backdrop of all of this, we know that the U.S. is running massive deficits and other nations are printing money and engaging in massive amounts of debt acquisition. I think we’re about $340 trillion in debt globally, and the U.S. is spending over a trillion dollars a year just on interest alone on the national debt. That’s basically what we spend on US military. Okay, so that exceeds defense and Medicare, Medicaid spend. The government borrows about $50 billion a week, and it borrowed a trillion dollars in just the first five months of this fiscal year. The national debt’s about $39 trillion. It’s growing by about $7.2 billion a day. The CBO projects that debt held by the public will hit about 101% of GDP this year, 120% by 2036. Keep in mind, we have real problems that start to kick in in 2032 when our Medicaid and Social Security funds basically start — no longer can pay out 100% of those benefits if you are under 50%. Don’t plan on Social Security definitely being there. I’m just going to tell you that. Act as though no one is coming to help. I’ve reached the fifth stage of grief on this one. Acceptance. It is just an additional tax that I pay, and it’s okay. All right, on top of this, just note this. The average interest rate on the national debt is projected to exceed the economic growth rate. Hear me? The average interest rate on the national debt is expected to exceed the economic growth rate starting in 2031. That is the definition of a debt spiral. We are not able to grow our way out of our debt accumulation. The dollar share of global reserves has dropped from 72% to 57%. That is the lowest since 1994, and that’s one of the reasons why it is important that we’re hearing this conversation about Iran right now trying to price oil in yen. Remember, U.S. reserves — this is the money that the other central banks have — they’ve been loading up on gold, particularly since early 2022 when the United States weaponized the dollar against Russia. He basically said, yep, your reserves don’t matter anymore. And every central bank around the world said if they can do it to them, they can do it to us. And for the first time, we started to see gold purchases exceed and surge in terms of what other central banks were doing, in terms of what they’re holding in their vaults, nations like Poland and China and Japan. Every Treasury issuance competes for space in the same strained repo market, in the same strained refinancing market. And the more that the government borrows, the more pressure it puts on the plumbing we talked about at the top half of this conversation. Interest is now the fastest-growing category of federal spending, and unlike discretionary spending, it does not get smaller when budgets get cut. It only goes in one direction. People have asked me, where do you go when you get information on liquidity? U.S. Treasury auctions. There are models that are out there for a variety of different people. Tom Lee, I believe, talks about this. Michael Howell talks about this. Let’s talk about the overall liquidity picture. This is important. Fed funds rate, sitting where it sits. All right. The VIX pushed to 27. The S&P 500 is not that far off from its peak, which is kind of kooky to really think about. And there’s no backdrop on the SRF. Hey, we’re doing it live. We’re doing it for free. Don’t cost nothing. Besson said the Fed is a long way from going back to QE. I don’t believe you, sir. We’re already doing QE, aren’t we? Isn’t that what reserve asset management is? Oh, no, that’s right. They changed the definition. Huh. Okay, so they’re going to come up with a new name. Something different. That sounds fun. The point is the cavalry is not coming in the traditional sense. QE is the process of creating reserves, pumping it into the system, and then pulling bonds out to lower yields. What are we doing right now? We’re just buying treasury bills. We’re creating reserves. We’re pumping it into the banking system, and we’re ensuring stability at a time the tax season is happening. Tomorrow is a very important day. The Fed removed the aggregate limit on standing repo facility operations back in December 2025. So the backstop is in place, but it is not active. It is a break the glass in case of emergency tool. So what matters? If one of these nine chains sets fire, the Fed could probably contain a couple of these things, not all of them, a couple of them. They can definitely help with the regional banking space. They can definitely create reserves to help provide support to commercial real estate lending. That’s what the standing repo facility and the emergency lending playbook are designed to do. But if two of these things catch fire at the same time, four of them at the same time, five of them, containment becomes difficult, if not impossible. And if three, four, five — I mean, we just keep going — that’s where you get the avalanche. That’s where the equity markets really start to melt down. That’s where you do get the comparisons to ‘08 or 2020 or where you get into a conversation of what might resemble a sovereign wealth crisis like we saw back in 2011 or even the threat of what transpired in China where they started to have a debt deflation spiral. These chains are all loaded right now. The question is, which snowflake ends up being the one that tips it? Isn’t finance wonderful and uplifting? Isn’t it great? Don’t we just move from one crisis to the next? The reality is I’m just trying to educate. I mean, I’m not that person who’s banging the desk saying that the S&P 500 is going to 1,267. I’m not doing that. I’m simply pointing out what’s going on. The only thing I can do is be calm about it and report it, and you guys decide what you think of it all. But what’s clear right now is that momentum has been negative. It’s been negative since January 28th. Remember, we have a reading. It was called the Capital Wave Rating. We’re going to come up with a different name for it now because we created Money Printer Pro. And every day we look at this number, and if this number is positive, that’s good. We want positive numbers. We want the S&P 500 to move higher. We want to create wealth. But I didn’t create this for this. I did it because I’m trying to help people get out of the way in the event that something significant happens. This went negative on January 28th. I said on January 26th when it turned yellow, I’m out. I raised my hands up. I gave you the Will Emerson speech from Margin Call, and I pointed out that I could not explain what was going on. And when I can’t explain what’s going on, when the party gets too weird for me, I go home. So I picked up the ball and I went home. Four days later, the 30th, gold and silver crashed. I was out of all my paper positions on the 26th. And then what happened? We had the largest momentum negative sell-off, I think, since 2020. And then we had Korea crash. And now we have this most recent downturn that is being exacerbated by the war. But I want to note, it’s not the war that caused the problem. All of these other issues that we discussed were already here. Private equity, private credit, Japan, repo, deeper concerns about refinancing funding. All of that stuff has been here the whole time. And it pops up every week or so, and then we rotate to a different headline. But here’s the thing. This signal has been negative since the 28th of January. This went negative on February 21st, 2020. Five weeks later, the S&P 500 was down 33%. This went negative back around March 7, 2023. There was no warning about a banking crisis that transpired. And then four days later, Silicon Valley Bank was gone. It went negative in late August of 2022. Six weeks later, we had the sovereign wealth crisis in the UK. And I’m not saying that every time it goes negative that a crisis is transpiring, but it is telling us something about liquidity and it is telling us something about the state of affairs in the financial markets. And it has obviously gotten out ahead of some pretty sizable downturns. This is all academic. This is all coming from about seven different sources. Cliff Asness, the Hennings, talked about the J.P. Morgan 2015 momentum analysis. Right now, we are at minus 44. And if you are a member of Money Printer Pro, you have access to this site. Sign up today. You get an email. You can go in, change your password, and you’re going to get access to this. And I want to show a couple of quick things that are important about this. First, there’s your reading. There’s two readings. The first one in the academic world, there’s always been an equal weighted number, right? Number of stocks breaking out versus breaking down based on very specific formulas and the individual sectors in which they operate. But we added a cap weight. So what this does is it showcases if just a small number of stocks are helping to pull the stock market back up or into equilibrium. And the reason for this is back in 2021, the S&P 500 burned higher all year. But the bottom 493 S&P 500 stocks really didn’t do a whole lot. This was all driven heavily by the Mag Seven. So we wanted to make sure that we had a cap weight that could explain that. And we will see on certain days, this number will be very negative, but this cap will turn positive and we’ll see a squeeze. We’ll see the beginning of a potential rebound in the equity system. On top of that, you have your screamers and you have your crashers. These are your breakout stocks. These are the names that are in high momentum conditions. They’re up on the week. They’re up on the month. They have high RSIs. They’re continuing to see the phenomenon of momentum. Higher prices create higher prices. And I can look at this list right now and I can tell you typically that when certain names get on this list, I can tell you what’s happening within that sector. These are largely earnings related. Motorola had a great earnings report. Verizon’s at the top of the list right now. And we’ve had a couple of names pop up on this list in recent days, names like Broadcom, only to fall right back off and just roll right back down. Broadcom just did this. It was on this list for about 15 minutes. It popped, and then within about a couple of days, you have that nice weekly move, and then it fell off the list, and this stock went from 347 down to 321. Makes it difficult, but that’s why you got to keep an eye on this, and it’s live. It updates every 15 minutes. I can look at the negative side, and I can tell you that none of the problems have gone away, and even though I’ve seen a significant amount of insider buying on names like Weyerhaeuser, nothing. Consumer defensives, under pressure. Kraft Heinz, General Mills, Panagra. Look at all the regional banks — Fifth Third, Truist, Regions. We can look and see that Dollar Tree’s under pressure. That’s the consumer under pressure. And you can see when these things pop up and they’re on this list for multiple days. GIS has led the list for 10 days. Look at the performance of this equity going back 10 days. This stock has gone from 45% down to 39. There’s ways to trade this. I typically prefer to use spreads because if the stock does pop higher, I have a tight stop that I can use using put spreads. Call spreads with the same thing, 20% stop, kind of the focus that we have. Some of these names I just buy, just the stock. I just buy the stock. If it’s on the screamer list, I set a 2% stop, and I just look to see if it can continue to run. On this side, however, this is screaming to me right now. This is screaming to me right now that the regional banking space and the financial system actually needs stimulus. And we’re not going to get it yet. You might get a different type of name, but that’s important. So if you have access to this, you’re going to see you have the Russell. You can obviously pull the Russell up. That’s the same thing. Screamers, crashers on the Russell. Nasdaq, I don’t really spend a significant amount of time because it’s such a small pool of stocks. But here’s your screamers, here’s your crashers, and then here’s your deep dive. And this is one of the more important things people were asking about. Pick any stock out there. And I want you to think about this tool for what I really hope you can use it for. I’m not foolish. I know that you buy a lot of financial newsletters, and you’re looking at a lot of different trades, and somebody might have a recommendation to you that’s saying, hey, we’re seeing a lot of activity around this very specific price or however you want to define it, and they want to go out a month using calls. Well, let’s say that they do that. If you come over and you look at this, the segment — there are seven directions that stocks move, and what really matters is whether they’re breaking out or breaking down, right? So if somebody’s recommending something long and it’s still breaking down, well, maybe you want to wait. Maybe you want to wait. If somebody comes out today and says there was massive amounts of insider buying on Fifth Third Bank, you should buy that stock today. Well, you should be looking at Fifth Third Bank and assessing, hey, this is still breaking down. Where is it sitting with its RSI? Where is it sitting with its MFI, Relative Strength Index and Money Flow Index? Where is it sitting with its 8-day and 20-day moving averages? You know me, when I’m looking for momentum, I’m looking for that 8-day to cross over that 20 and the continued stronger momentum to move. I am not worried if I miss $2 or $3 on the upside of a trade or an investment. If I’m looking to go long, I want to have conviction. I want to see technicals. I want to see money flowing in. I want to see it in the money flow index that volume is coming back. I’m not trying to be the first person over the wall and I’m not trying to be the person throwing good money at bad money. So it’s important to have these types of tools in place and you recognize, hey, should I look for the continuation of trend? And remember, stocks move like this. They oscillate. It’s like a wave. It’s very important to note that. Stocks have this bottom out. There’s a bottoming out. There’s an even. There’s a process to this. And then kind of that flow. Now, it’s not going to obviously look like this, but you can see in this chart the way that the oscillations have taken place over the period of a year using the daily chart. So just recognize there’s a lot of different things that you can use. This is really about building conviction. Conviction is important. You need to be able to hit the buy or hit the sell, and you want to be able to learn about the technicals that are associated with it. Over here, you have triples. Triples is, well, triples is best. Triples is best. The point that we’re showing here is this is multiple forms of momentum. This is short duration momentum, surge momentum. This is long-term drift momentum. And then we have the anchor ranking that focuses on fundamentals, fundamental momentum. We have three different tools in place, right? It’s going to produce the same prime movers and the same anchors. But the one thing that’s here that’s very critical is this PQI. And that PQI is the smoothness of that momentum. Smooth momentum is best. That’s what we want to be focusing on because we’re looking for the trend to continue, either a burn higher or a burn lower. And as we can see, a name like General Mills has just been — I mean, that is a beautiful looking negative momentum chart. Just a smooth continued breakdown over time. And you don’t want to have a lot of chop. You don’t want to have a lot of things moving around. You want to see smoothness in the trend line. It’s very important. So the higher that number is, the better. That’s what we’re looking for. Drift, anchor, conviction. Honestly, this stuff’s just for me. Don’t worry about it. Don’t worry about all this stuff. This is legitimately all — I opened this up very early, okay, because people were asking for it. A lot of the tools, a lot of the calculations and things are still kind of sitting in the room. So welcome to the party, but recognize you’re about a month and a half early. You still have some things right here that are showcasing. None of this stuff really matters. Really, at the end of the day, you got to just focus on the individual names, the weekly, the monthly, the RSI, the PQI, the smoothness of momentum. And then these numbers, it’s going to take me a day to explain. On top of that, one last thing that we do have is an option calculator, and this is just for your own use if you trade options. Remember, I like to focus on things that are tied to spreads. So we have put spreads, we have call spreads, we have long put. And you pull your expiration up. You can lay the trade out. And so, for example, a long put on Apple 442 at 210 is going to show you what your max profit is, your max loss, your breakeven for the trade, and your probability of profit. When I’m doing spreads, once again, I focus on an 80% probability of profit, 20% gain if I’m selling premium. And I look for an annualized return of about 100%. All right. So just to recap, to wrap up our day, we had a great time, everybody. I had the time of my life. I hope you did too. If you have questions, just hit the link. I’m going to throw a link in the email for you to take a look at what we’re building here. People who are members of Elite, we have a call coming up in two weeks. That will be two Saturdays from now. So that will be our quarterly event. A conversation will probably go an hour that day. We’ll talk markets. I can’t do individual positions, but we can look at individual charts. And on top of that, anyone who is a member of Elite gets access to the new tools as we continue to unveil them on GarrettBaldwin.com. I will remind you once again, if you are not a member of our Insider Buying Report — Insider Buying Report is over on Substack as well. We have just launched insiderstockbuys.com. This tracks every single filing that goes through the SEC. We’re just pulling data from Edgar. And we now are going to be having a variety of different tools that are going to come out for those readers as well, including you can put a list of any stock that you want. It’s going to provide you all of the technicals and all the insights. And we will have emails that come out if executives purchase the moment that the stocks that you’re watching, size of the position, a little bit of analysis that comes with it. If you have not had a chance, check it out. ISB, insiderstockbuys.com. That is part of the Insider Buy Letter that goes out on Substack as well. And we just continue to focus on that. One of the things that I will note once again is that insider buying will likely call the bottom of whatever this crisis is in addition to a potential policy shift. So we’re constantly watching insider buying because it is such an important predictive tool in terms of understanding how broad markets operate. And we look for insiders to call the bottom to accompany a policy shift like we saw on November 20th and November 21st when the Bank of Japan printed money. All right, everybody. I hope you have a great Sunday. Thanks so much for taking the time to join me today. I will be back. I will see everybody tomorrow for the Morning Burr, which will be probably released somewhere around 8:30. So have a great day. 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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