A Great Headline Question... But Let Me Answer This...
Even thought this headline is meant to be a joke... there is an answer...
Dear Fellow Traveler:
Submitted… with light comment…
This was a morning headline at the Wall Street Journal today…
Heard on the Street is a column laced with sarcasm.
Spencer Jakab is one of the best at poking fun at the pivots of Wall Street analysts.
When it comes to the market moves… he points out that:
Nobody truly knows why stocks are up or down in the short term, and
Any answer you’re given is probably retrofitted, self-serving, or meaningless.
And that’s true when it comes to most academics and Wall Street analysts…
But… hold on.
He says that a Torrent of Bad News hasn’t sunk the market…
Does anyone know why the stock market is at record highs?
As we’ve pointed out, short-term downturns that have been significant over the last six years are directly linked to liquidity drying up.
It’s not retrofitted.
We can see in real-time that the market is witnessing a slump in leverage, and that all these significant downturn events are linked to the unwinding of large institutional positions.
This was the case in 2020, 2021, 2022, 2023, 2024, and 2025.
Correct, we have NO IDEA why liquidity and leverage are going sideways at the exact moment that the unwinding starts.
After all, our Equity Strength (aka Crash) signal went negative on March 7, 2023 - and there was NO WARNING about Silicon Valley Bank except for an obscure blog post in October 2022 on Seeking Alpha that warned about it…
The media and Wall Street completely missed it.
Just a few days after our signal went negative and capital had screamed out of the market, SVB collapsed…
But if you want to know what I do…
I watch the FNGD… always.
If that cracks the 20- and 50-day moving averages on the Daily Chart…
That August Break above those levels was the Nikkei Crash last August (Before a policy pivot by the Bank of Japan and massive insider buying led the markets higher…
The February break was the start of an excess liquidity drain that turned into a full-blown trade crisis (then the lifting of Liberation Day, policy pivot, and insider buying).
Same story… over and over. Leverage being unwound… concerns about the bond market…
Rinse repeat.
So, again, if we break above the 20-day and 50-day moving averages on the FNGD, there’s something wrong. And potentially “crashy”
The Other Question
Why is the market going up right now?
You get 15 guesses, but the first 14 don’t count.
It’s an expansion of liquidity and capital in the system. We’ve seen the continuation of short-term T-bills to finance the U.S. government… and that helps fuel leverage.
We’ve seen “supportive” policy from the Fed…
Money moves markets… as Michael Howell tells us.
Or simply put… BRRRRRR!
That’s not self-serving. And it’s not a guess.
It’s simply a reflection of the patterns we’ve witnessed over the last six years, and highlighted by policy pivots at the Fiscal, Monetary, or Supply-Side (trade policy shift in April) that halted the unwinding of leveraged positions (and then insider buying).
It recognizes that accommodation and support help equities and other risk assets rise in price.
And while Spencer jokes that no one ever seems to know why stocks rise and fall…
I’d argue that the real joke is that people are still ignoring this chart from Michael Howell… This is the measurement of the Global MSCI Index and Global Liquidity.
Your eyes are NOT playing tricks on you…
BRRRRRRRRRRRR!
Stay positive,
Garrett Baldwin
Is there a method to keep track of liquidity now that private equity is starting to outrun the banks?