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Dear Fellow Traveler: Thanks for humoring me yesterday… I try to make sure I write Money Printer every day. But I went to Washington, D.C. to visit the National Spy Museum with my wife and daughter. It was absolutely fascinating… Today, I want to offer a few observations about Spies… and… the S&P 500 SPDR ETF (SPY), which is currently sitting below its 200-day moving average… The message today… The Bottom isn’t in… Let’s dig in… SPY No. 1: Robert Hanssen The SPY museum is a twisting, turning maze of discovery… the. secrets of camouflage, the subterfuge of double agents, and the deception around us. Toward the end of the lengthy tour, you pull into a room with the biographies of Aldrich Ames and Robert “Bob” Hanssen, two of the world's most notorious security breaches in U.S. history. I hadn’t thought about Hannsen (a former FBI director overseeing classified intelligence around Russia) in a while, since that story evolved during the 1990s when I was distracted by being a teenager. But they showed a handful of videos of Hanssen and scenes from the film Breach, a fantastic portrayal by Chris Cooper of Hanssen’s turncoat role with Russian intelligence and of a young intelligence agent's capture of the CIA Director red-handed... I’ll definitely rewatch the film again… In a display, there were images of the awards he won, the guns he carried, and what appeared to be documents and tools he used to drop intelligence to Russian handlers. The whole thing legitimately gave me chills. SPY No. 2: No Bottom in SightThe markets are under pressure from an ongoing number of negative catalysts… Private credit remains strained, and questions continue about whether the redemption challenges will persist well into 2026. The Fed is still pumping $40 billion a month to help manage banking reserves during tax season. Valuations remain stretched, and interest rates aren’t coming down any time soon, which could put new pressure on the repo markets in the coming months. And… the war has pushed energy prices dramatically higher and raised concerns about nations running out of oil worldwide. Our signal turned negative on January 28, and the slow bleed has started to accelerate. Today, I received a question… when we say the “Bottom is In…” what am I looking for. Specifically, I’m looking for the Relative Strength Index (a price oscillator) to move into oversold (30 or less below)… I look for the Money Flow Index (a price-and-volume oscillator) to move into oversold territory (20 or less)… I look for insider buying activity to accelerate… I look for some policy accommodation (be it in war, trade, monetary, or even fiscal policy). And I look for people to be at peak fear - the last time everyone was an expert on the Great Depression in April 2025, or believed that Japan’s economy would implode in late November 2025.
We’re oversold on RSI, but MFI is right above key lines. Insider buying remains weak… but there’s no shortage of doomsday predictions. It feels like a short squeeze could come on the back side of today’s Triple Witching. Standby… cash is still a position.
Look for lower highs… and lower lows… until we get some solutions for this market… Spy No. 3: A Master of DisguiseI had forgotten that a few years ago, I watched a video about Jonna Mendez. She was the Chief of Disguise for the CIA. She’s always compared to Q in the Ian Fleming novels depicting James Bond. But Mendez is way more fascinating… as she was not only one of the greatest masters of disguise in history… She also helped write the book Argo: How the CIA and Hollywood Pulled Off the Most Audacious Rescue in History with her husband. If you get a chance… find an hour… and watch any of the number of films on YouTube about Mendez. You can start with this one… where she breaks down 30 different movie scenes and tells you how good and bad Hollywood is at Spy films.  She’s hilarious. I imagine you have to have an incredible sense of humor to do what she did in her career… Spy No. 4: 33 Years of Passive Investing…Some people have asked about why this market hasn’t just cracked in half… Well… a few things… passive investing now accounts for about 50% of the S&P 500… so fund flows are providing some strategic support. But we’re getting close… I remember that 1993 was an extremely critical year that fueled a large number of distortions to the U.S. financial system… and that year is why I rarely go back before the 1990s to discuss how the market works. In 1993, monetary policy, fiscal policy, supply-side policy, Treasury leadership, and housing policy changed in drastic ways that helped fuel our continued financialization of the U.S. system… But there might not be a bigger force on equity markets than the birth of passive investing. Today, there are 33 ETFs that "track the SPY…,” but in reality, most active and passive investors do so through whatever vehicle they’ve chosen. Active investors crowd the SPY because it’s their benchmark… passive investment funds build around the SPY because it’s convenient… and the fees are there for the taking. It’s not a conspiracy. It’s just a matter of how market incentives work… And Finally… SPY on the Dollar…The U.S. Dollar Index (DXY) is hovering near 99.3. And many investors are confused by its resilience.
I will just repeat what I said a few weeks ago. The dollar is the primary refinancing currency in the global economy, and demand for it is very high in a world where about 56% of global trade is conducted in dollars. In addition, note that European and other nations largely settle their trades in U.S. dollars for oil and other commodities. So… they have to convert their currencies in dollars - increasing demand - in order to pay for that oil. It can be a little confusing… and it feels like a paradox. But interestingly, in periods where global liquidity is under stress, the dollar can perform quite well. Look back during COVID when the whole world raced toward dollars… and not… gold. That was when the Federal Reserve had to open the taps and ensure that foreign banks had access to the U.S. dollar…
We live in a weird world… And I’m just trying to make sense of it all… 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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