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. The Market Myth That’s Fooling EveryoneWhy your “cash on the sidelines” is already leveraged into stocks... you just don't realize it...
Dear Fellow Traveler, Every week, some talking head drops the same line: “There’s $7 trillion sitting in money market funds just waiting to rotate into stocks!”
They see this chart and think all that capital is rocket fuel waiting in a tank… ready to blast markets to the moon once investors “deploy their cash.” Here’s the problem… They’re hopelessly wrong. That money isn’t sitting on the sidelines. It’s already in the game - just wearing a disguise… like ex-Mets manager Bobby Valentine with a mustache…
The Money Market Shell GameMoney market funds are essentially mutual funds that invest in ultra-short-term debt, such as Treasury bills, commercial paper, and certificates of deposit, which mature in days or weeks, not years. They’re designed to maintain a stable $1 share price while paying you interest. Think of them as the “savings account” of the investment world - boring, safe, and liquid. When you park money in a money market fund because you want to “stay safe,” you think your cash is sitting in some digital vault collecting 4.25% interest. That’s where the mustache comes off… Turns out that your “safe” money market fund instantly lends that cash to dealers and banks… And they pass that cash off to hedge funds and trading desks through the repo market. Guess what those Wall Street pros do with your borrowed money?
Well, they buy stocks, futures, options - anything that can generate returns higher than the 4.25% they’re paying you. Yes… they wanted you to let them use YOUR money to trade and speculate… That’s by design… So while you think you’re sitting in cash, your money is really fueling the very stock market rally you’re afraid to join. How Your “Safe” Cash Becomes Stock ExposureHere’s how the machine really works…
What’s wilder? This happens every single day with trillions of dollars. So, when the media says that there is “$7 trillion waiting to enter the market,” they’re missing the point entirely. That money already entered the market… through the back door… in a disguise… Money markets aren’t parking lots for cash. They’re fuel stations for leverage. Every major stock rally of the past 15 years coincided with cheap money market funding:
Now Let’s Break Your Brain…Here’s the real fun of it all. You might ask: Well, if retail traders rotate that money back into the stock market, what happens to the cash that comes from the sale of equities to retail investors? Right? Where does that money go? This “money market money” goes to whoever sold you the stocks. That’s it. You give them cash. They give you shares. So, now they have the cash… and they decide what to do with it. Most of the time, they put it right back into a bank account or money market fund. There are really only three places cash can sit:
It doesn’t disappear — and it never leaves “the system.” It just moves from one owner to another. The Real “Rotation” Already HappenedRetail investors continue to wait for the “great rotation” from cash to stocks. Meanwhile, professional traders already rotated that cash into leveraged equity positions months ago. It really ramped up around May 1 of this year… It’s like waiting for water to flow downhill while it’s already powering the hydroelectric plant at the bottom. The money printer didn’t just create asset bubbles directly. It created the funding conditions that allowed Wall Street to leverage your “safe” money market deposits into massive equity bets. Your 4.25% money market return? That’s the vig Wall Street pays you for borrowing your money to make 15-20% in leveraged stock trades. You get the crumbs. They get the cake. And somehow you think you’re being conservative. Remember, there is no cash “on the sidelines…” Because there are no sidelines in post-2008, post-GFC finance. Your money market fund isn’t a savings account. It’s a wholesale lending operation to the same Wall Street firms pumping stocks to record highs. The $7 trillion isn’t waiting to buy stocks. It’s already buying stocks with massive leverage. The only real question is: Are you content with earning 5% by lending to Wall Street, or do you want to play the game they’re using your money for? Because that’s how you beat the market… by timing it… and taking risk when it’s time. We’re here to help… 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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