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. You Want to Get Charts? C'Mon. Let's Get Charts."Haven’t You Ever Heard of The Healing Power of Laughter?"
Dear Fellow Traveler: Well… what a turn of events. My cranky eight-year-old daughter didn’t want to go to her lacrosse game today. She said she wasn’t having fun… So, I told her that her teammates were counting on her… and she wanted to play this year. She went… and she was not very polite about it all the way to the game. Then… they needed a volunteer. They needed a goalie today. And she threw up her hand… She allowed only three goals in the half she played and made an incredible save to end it. One of the saves where the other parents look at me and ask… “Was that a hard save?” And I just shake my head and say… “Yeah, that was almost impossible…” Then she played midfield and immediately scored… Then, after the game, the snack that parents brought was “donuts.” What a turn of emotions this child had… We went from volatility to calm and joy… She was the emotion of the stock market over the last week… The thing that really caught me off-guard. The ride home. “I had so much fun playing goalie…” she said. “I want to play goalie again.” Hoo boy… I don’t know how my parents handled me as a lacrosse goalie for a decade… But it’s harder to be the parent of a goalie than to be a goalie yourself… Who knows… maybe one day she’ll be sending you emails too, telling you that her defensive signal turned negative or positive… Which brings us to this week… Let’s Chart Party… Chart No. 1: What Do You Want? “My Face on the One Dollar Bill…”Well… what can we say… the market roar on Wednesday was CLEARLY in the Money Printer Pro dataset on Monday and Tuesday… A collapse in negative selling pressure happened last Friday, followed by a positive reversion on the Russell 2000 on Monday and Tuesday. Our Cap-Weighted reading went positive on April 6…
Even if we had extreme fear that President Trump might “end a civilization…”, institutional flow said that they were betting on the TACO Trade… That’s what we do… even if we are confused… This breaks our bias… Which is the point… Chart 2: “I'm only laughing on the outside… My smile is just skin deep… If you could see inside, I'm really crying… You might join me for a weep.”A funny thing happened on the way to the software valuation collapse. Two months ago, we talked about the drop in valuations that took us into the 7x range. As I explained… There was a possible move down to 5.5x or less based on the historical behavior…
What’s really interesting about this chart isn’t that these valuations are at 4.6 today. It’s where they were in 2020 and 2021…. Why does it matter? Because the valuations started to expand in 2018-19 when the Fed cut rates and started another round of easing. Then, after the COVID collapse, it goes wild… all the way up to 17x. That’s bubble territory - and all clearly linked to the massive liquidity wave that was unleashed after the pandemic… only to quickly correct in 2022 when the cycle started to go in the opposite direction. Chart 3: ‘Where Does He Get Those Wonderful Toys?”Here’s Friday’s close… We now have a negative reading on the S&P 500 with a positive weighted cap. That just means the S&P 500 is getting yanked higher by the names in the Magnificent 7… this week, the MAGS popped nearly 5%.
We should exercise caution, as the figure suggests that the probability of a negative reversion is on the table. That means… lower highs… and lower lows. Don’t blindly follow this rally… Chart No. 4: “It's Me, Sugar Bumps.”Submitted with little commentary…
Another year of this is coming in 2027… Time to buy a year’s supply of Mellow Corn.
Chart 5: “Wait till they get a load of me!”This is the productive part of the economy in the equity market… We’re not down at lows we haven’t seen since the great burst of financialization and passive investing started in the 1990s…
Can this go to under 10%… Probably… Especially if we print a ton of money, and triple-leveraged Solana and Bitcoin ETFs go to the moon… Chart No. 6: “You Weigh a Lot More than A Hundred and Eight”Well, American consumer morale is pretty low…We’re at levels we haven’t seen since the late 1970s… The question now is whether Kevin Warsh will go the route of Volcker… use monetary policy tools to get this economy to bottom out…
I’m not sure what’s going to bring this back… but it’s telling you something when consumer optimism is WORSE than it was at the height of the Great Financial Crisis. Seems like there’s a problem with our money… Chart 7: “The Pen Is Truly Mightier Than The Sword!”The thing that this chart doesn’t explain… is WHAT the military will spend money on. The Iran War has shown us the shift in warfare on the back of the Ukraine-Russia war. The future of warfare will be found in the scale of cheaper technologies… This isn’t about aircraft carriers and ground troops. It’s about drone technologies that can take out a tank from 20 miles away… and lots and lots of drones…
I continue to argue the optimal name in this space if Lockheed Martin (LMT) for defense… but if and when they do increase monetary expansion, the name to own will be Kratos (KTOS). It’s down 20% in our Postcards portfolio… but that was after a rather manic rally took the stock at the onset of the year. The drones are the point… Chart 8: And now, folks, it's time for "Who do you trust!" Hubba, hubba, hubba! Money, money, money! Who do you trust? Me? I'm giving away free money. And where is the Batman? HE'S AT HOME WASHING HIS TIGHTS!Debt expansion drives equity markets higher… Just the way it works. What we are trying to avoid at all times are those contraction periods… that’s where leverage in the bond markets pulls back, margin buying stalls, and refinancing issues start to emerge. We’re heading into that part of the cycle right now…
But don’t worry… They’ll monetize again… they’ll engage in fiscal repression… they’ll print money and tell us that they’re not printing money. The people paying attention will make a fortune… We’re paying attention… Chart 9: “Remember... You... Are My Number One... Guy!”Well… this Rory guy seems pretty good at golf… I don’t want to say this is over as we enter Round 3… but Sunday might not matter.
Which means I’ll be getting my Sunday back… Chart 10: “You’re a Real Nice Girl, and I Like You a Lot, But Right Now, Shut Up.”Finally… Here’s the IMDB ranking of every theatrical Batman film. Obviously, The Dark Knight is ranked No. 1. This is before they decided to start making Robert Pattison films as Batman… which, to be honest, no thanks. It appears the public likes Christopher Nolan's films best, but I just don’t see how The Dark Knight Rises is the No. 2 film in this universe…
Remember in that film when Bane puts all of the city’s policemen underground for a few months, and they all emerge clean-shaven with weapons? That made no sense… I’ll go Dark Knight No. 1… fine. But the Keaton/Nicholson tandem should be No. 2. That film is great… and maybe I’ll watch that tomorrow instead of The Masters. All right… 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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