How To Spot a Rebound (Week in Review)
I get $6 for all my troubles... ask Larry Summers about his plans... discuss the Fed's "Let them eat cake" moment... and much more.
Editor’s Note: When discussing the Money Printer, we must understand how we arrived at this point. It all goes back to a single day in August 1971 – the day our Dollar Curse began.
For 17 years, I’ve been studying the underlying challenges of society and our economy. I have now released a special report detailing my conclusions. To see my latest presentation and access my new report, please click this link.
Good morning:
The S&P 500 just experienced its best streak in 20 years. Economic data hasn’t been great, but we know that largely doesn’t matter in a world driven by… new capital.
Michael Howell noted this week at CrossBorder Capital that “Global Liquidity” - or every form of money floating around the world from bank vaults to cushion couches - hit an all-time high.
Since capital finds a way into risk assets, markets worldwide are seeing strength.
We didn’t need to wait for Howell’s confirmation on the recent rally.
Two things happened in the last few weeks that should always instill confidence. The first was a positive Momentum event for us on April 23 - a reading that was supported by the push of the BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGA) over its 20-day moving average on April 23 and 24. Since that day, the FNGA has gained more than 35%.
Here’s the chart - the 20-day moving average on FNGA is pink.
Magnificent Seven stocks are surging… and the SPDR S&P 500 ETF (SPY) is now up about 6% since crossing over its 20-day moving average as I note time and time again, the bulk of gains for the market, stocks, and indices happen OVER the 20-day moving average, since it takes a lot of money inflows to consistently drive that stock or inext higher and higher to sustain that momentum. Here’s the SPY.
As I noted in this massive presentation on Friday, our signal flips on equilibrium in the market when the number of stocks breaking out overcomes the number of stocks breaking down. It’s a simple mathematical equation… one that went negative twice this year, followed by steep selloffs on February 24 and March 26.
This move positive from about 11 days ago is our first sustained crossover this year.
So, following the Capital Wave Report daily would be a good idea if you’re a trader or investor and want to know when it’s time to buy with confirmed momentum. Here’s the headline from April 23…
But… there was an earlier event that signaled a rebound—at the market bottom. Recall… the Trump administration delayed Liberation Day from April 8 to April 9.
When he put out on social media that it was a good time to buy… executives did.
We had the strongest insider buying-to-selling ratio in real dollars this year. That blue line below is the five-day moving average of executive buying to selling on SEC Form 4 documents.
That spike on April 8 was the strongest level we’d seen since the December dip…. and aligned with previous downturns in October 2022 and October 2023.
What came was a policy shift - not fiscal or monetary this time - but around trade.
That delay - and the S&P 500 tapping 4,850 - fueled a turnaround. And executives took advantage.
We track this ratio every day… and we can confirm again that the executives got it right. It was tough for the retail investment space to have conviction. But we have seen our three primary indicators align again as we enter May.
Strong capital flows…
Strong momentum…
And strong insider buying.
It’s a very simple worldview. But it keeps working.
Let’s get to the week in review.
Monday, April 28
Why The System Comes First (And What to Do About It)
I keep my sense of humor about how modern finance works. But the reality is that central banking and bailouts are the feature… not the bug of the system.
The good news is that investors have a choice. Protection and opportunity plans are in place to deal with the future, one of more money printing and more debt.
Tuesday, April 29
Let Them Eat Beehives...
On Friday, I went to D.C. to see it for myself. The Federal Reserve is spending $2.5 billion on its headquarters in Washington, D.C., overlooking the parks. They’ll have private elevators… beehives… and water gardens.
Did we mention that the Federal Reserve lost over $70 billion last year?
Wednesday, April 30
Why Can't We Innovate Home Lending?
Everyone’s got an eye on the housing market right now. Sales are slowing to a crawl, as interest rates remain very high. You’d think that in this environment, where Wall Street innovates everything from Malaysian Palm futures to leveraged ETFs, we’d find an easier way to lend into America's most important consumer market.
But we’ve barely changed our reliance on 30-year mortgage products… since they emerged last century. What gives? Well… you’ll be shocked why nothing changes.
Thursday, May 1
$5.95: The Price of My Digital Identity
It took eight years for the class action lawsuit settlement to hit my inbox. After a massive credit agency exposed my data… my credit card was stolen… my cell phone was hacked… spam was piling up in my mailboxes… and multiple efforts to get purchases I didn’t make off my credit report - I received a gift card for… $5.95.
Easy Street, here I come…
Friday, May 2
Is There Such a Thing as "Free"?
At some point, the pendulum on politics will swing back. And we’ll be surrounded again by people who think you can just print money forever and buy votes…
The MMT crowd argues that we don’t have to borrow our own money that we print…
Yes, we do. Because interest rates aren’t what matter… Exchange rates are. And if people worldwide lose faith in the dollar’s stability… they’ll dump it fast.
Saturday, May 3
Oh Great... Here Comes Larry Summers
In about 45 minutes, the Sunday news programs hit full swing. And now, Larry Summers, who helped engineer China’s ascendancy on the global economic stage, will castigate Trump over trade with China.
This isn’t a defense of Trump. What’s Summers' plan to address the strong dollar, massive debt, swelling deficits, and straight-up decline in U.S. manufacturing? I have a plan… I outlined it as well in Saturday’s column.
That’s all we got. I’ll be back tomorrow morning on air at 8:45 am ET.
Stay positive,
Garrett Baldwin
About that Federal Reserve:
https://kingcambo812.substack.com/p/fear-and-loathing-at-the-federal