Postcards: The Mystery of the Hotel Snorer

Greetings from... where am I? Northern North Carolina... We'll go with that. Let's look at the week ahead and solve a mystery from six feet away. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: The Mystery of the Hotel Snorer]( Greetings from... where am I? Northern North Carolina... We'll go with that. Let's look at the week ahead and solve a mystery from six feet away. [Garrett {NAME}]( Apr 28   [READ IN APP](   Dear Fellow Expat: My wife has taken to “Dateline NBC” murder podcasts, narrated by Keith Morrison. On long car trips, I don’t get the radio much. I can only take so much Taylor Swift. (We’ve made it this far with barely a mention). So, we’ve been listening to these 30-minute murder mystery stories spanning eight to 12 episodes about a death that happened long ago. Right now, we’re listening to “The Girl in the Blue Mustang” - which covers the tragic death of Michelle O'Keefe and an ensuing miscarriage of justice. That’s up my alley, given that I was a member of the [Medill Innocence Project](. Yes… one Dateline “story investigation” lasts four to six hours, full of twists and turns and predictable outcomes (to be honest). I’m a journalism guy at heart. We ask: Who, what, where, when, why. Whodunnit can be answered in two sentences. Nothing more… But “Dateline NBC?” This is an investigation… And Keith Morrison will spin you a long yarn-even if it takes you down a path for a random hour that leads to nowhere. But the story-telling is well-done, with creative narrative, long character-building exercises, and the occasional pun, all delivered under a gravelly voice. It makes time go by quickly; its framework certainly stays with you if you’re a storyteller. It did so even more than I expected… I couldn’t sleep last night in the hotel, and a mystery formed. The two dogs, my daughter and the wife were all in one bed. I was in the other. And someone… Someone was snoring… A mystery, perhaps? Who Dunn It? I’m a light sleeper. A mouse peep will wake me, a creaky ceiling, a child running down a hotel hallway, or a random guttural snore sent out into the night. And last night, just as I would finally reach that point where sleep may finally come… Someone or something bellowed a single snore. And then… I was wide awake while it was silent again. But whom? Ah… that is where insomnia kicks in. [I’ve written about insomnia before]( - the never-ending exercise of having every thought possible for as long as [possible until sunrise.]( A journalist might investigate the source of the snore. I should have gotten out of bed, sat on the edge of theirs, and waited, a stakeout of sorts. Then, shift their position, or at the very least, tell them to stop. But I didn’t. Instead, I lay in the other bed… sculpting the Dateline-style “Who-snored-it” story… and what it would sound like if narrated by Morrison. It would involve multiple backstories and a long-flowing introduction about Florida, gators, Interstate 95, and an economist on a mission - only for him to be disrupted by the “Terrible Six-Foot Snore.” We’d explore the past of a somewhat flatulent pit-basset mix that recently had surgery and had a penchant for snoring while dreaming. In another episode, my daughter stayed up too late… was it possible she was overtired? We’d need a whole backstory on her… all the way to the last trip to Maryland. She wasn’t a likely candidate, but it’s always the person you least suspect, right? My wife? “Ah… tread lightly, author,” a voice resembling Keith Morrison’s echoes in my head. The episode on her had better be very complimentary. Of course - there was that incident with the dental surgery and the medication that left her snoring in the summer of 2016. “A possible suspect?” the Morrison voice says. Let’s do two episodes there. And then there’s Gracie, the notorious dog snorer. She is a Hurricane Maria dog from Puerto Rico. When we adopted her a few years ago, she understood fluent Spanish, but now she doesn’t, so she sleeps… and snores… often. Her deep cultural background, like her fear of water, would make an okay episode. But what about a deeper twist? What if I was so tired that it wasn’t real? Perhaps we’d have a Christopher Nolan ending in which I am in one bed, watching myself snore in another. This went on for an hour before it trailed off, much like a Dateline NBC report. I guess we’ll never know… or more importantly… NOT want to know out loud. Let’s get to the week ahead. The End Is Near!!! Having spent the week catching up on voices and opinions, this has been one of the biggest weeks of “bearish” commentary since many people were wrong in December. The renewed focus centers on a few things: Japan’s financialization, the U.S. debt picture, regional banking reserves, and interest rates. So - pretty much everyone’s been worried about for the last… 12 years. Myself included. But we know that the music can play much longer than many shorts can stay solvent. And some of these voices get the broken clock treatment regularly. It’s not complicated to say that the U.S. bond market may strike and stop supporting the U.S. Treasury Department. The question is when that final snowflake hits the mountain - the one that causes the mighty avalanche. Let it come because it will be a mighty opportunity both to the downside and when we can buy up everything we’ve wanted at a reasonable valuation. Forecast timing is tough, so we pay close attention to our signals. We haven’t missed a major selloff in the last four years. We’ve been negative since April 12, avoiding this recent selloff. It’s unclear that we’re done yet with a Hawkish Fed expected this week. And we just witnessed - off oversold, [as we’ve taught people how to trade for free]( the largest short squeeze since March on Thursday and Friday. There is ample time to prepare, and I’m still bearish after this week’s upcoming meeting with the Fed. Japan’s fiscal condition will lead to a series of ugly challenges for the world, as will U.S. fiscal problems. But will the stock market crash this week? Do a Google Search, and you’ll see that Yahoo! and other media outlets have used “Will the stock market crash this week” as a Search Engine Optimization (SEO) term to attract readers for over two decades. And yet, too many of these writers fail to understand one simple thing: Liquidity (or a lack thereof) causes equity crashes… not Apple's earnings reports or a Fed chair's statement. Those latter elements are snowflakes that build and might trigger the ensuing avalanche. Liquidity is under pressure… but I expect we’ll see even more refinancing and debt - because that’s all central bankers know how to do. I’ll let you know as soon as it happens. Monday, April 29, 2024 Event: Market reactions after Fulton Financial took over First Republic Bank Republic Speak: Well, we had another bank collapse. Regulators seized the embattled First Republic Bank and shoveled it into the hands of Fulton Financial. The latter’s stock surged 10% on Friday after the bell. Fulton’s an excellent financial shop, but this will start the entire debate again about the safety and security of banks at the regional level. So, be wary because another social media wave could come. I’d argue that the best bet right now is to pay close attention to what insiders are doing at these banks, as we’ll probably see a few headshots taken at the usual targets: New York Community Bank, Bank OZK, and Webster Financial. Ultimately, we’ll all have accounts at either JPMorgan Chase… or the Federal Reserve. Our regulators are terrible at this, and fractional reserve banking is a total clown operation. Tuesday, April 30, 2024 Event: Amazon (AMZN) Earnings, FOMC Starts Its FOMC Meeting Republic Speak: I am bullish heading into the FOMC meeting because everyone is so damn bearish about everything else happening in the world. Our SPY signal turned positive on Friday afternoon, but I don’t expect that to last very long. Fun Fact: the stock market isn’t about economic growth anymore. This chart has been flying around, signaling that there’s been zero growth for a decade. What’s been driving the stock market higher? According to Peruvian Bull, it's been flat for a decade if you do the equation S&P 500 divided by the Fed’s Balance Sheet. Syz Group notes that there’s been zero “real growth” in stock prices. They offered this chart showing the Fed Balance Sheet in line with the S&P 500. How sad is this? Now, some people have called this BS. And it’s not a perfect correlation, but it’s noticeable. I prefer to examine Michael Howell’s measure of global liquidity and compare it to the MSCI Global Index. As he says,[“Money moves markets…”]( Michael Howell - Read Capital Wars… Follow the liquidity, and the markets will take you in an ensuing direction (liquidity is weak at the moment, and action should be taken by central banks soon). Action like easing and more inflation… well… stocks go up… but not because the companies are doing well. Isn’t “investing” fun?). Amazon has taken over the retail world - COVID helped make it happen, pulling e-commerce demand forward by five years. However, the bigger issue is the U.S. consumer, rising transportation costs, and rising prices. Amazon is also facing pressure from the FTC. I guess I should care, but Amazon is such a despicable company in how it treats its vendors that I do hope that the FTC breaks this one up into 1,000 pieces. Wednesday, May 1, 2024 Event: CVS Health (CVS) Earnings, Fed Meeting Results Republic Speak: We’ve got skin in the game in CVS Health earnings after we released a trade on its rival Walgreens this week. These companies were supposed to solve a healthcare problem across America, not running their balance sheets off a cliff. Higher interest rates have coincided with a dramatic weakness in their performance since 2021. I suppose that turning half their location into retail operations for alcohol, cigarettes, and junk food wasn’t exactly the best “healthcare” idea, was it? How will the Fed screw this one up? Well, a hawkish stance could see the 10-year bond stay above the yield of the S&P 500 for the fourth consecutive week. This streak of three straight weeks - currently happening now - hasn’t happened since 2002. And that’s the problem. If we see more weakness at a time when everyone is deeply worried about other global economies, I will stay HIGHLY cautious for now. Thursday, May 2, 2024 Event: Apple (AAPL) Earnings, Peloton (PTON) Earnings Republic Speak: If Apple is the market… then Apple will greatly impact events for the next 45 days. Shares have turned positive in recent days, but there’s been a clear negative channel since its December 2023 top. If our signal is still negative, look for a test of the 50-day moving average, followed by another leg lower. Peloton, meanwhile, is a canary in the coal mine—a poorly run COVID stock in an industry with no moat and no competitive advantage. A rival in Bowflex just went bankrupt. The writing is on the wall; higher for longer should take this one down. I want you to pay very close attention to this. This stock has a negative book value and a ton of debt. I’m not sure it’s worth the $2.00 cash value, but I think there is brand value in the name. This could make for an interesting short-term distressed play if they announce bankruptcy. Friday, May 3, 2024 Event: The April Jobs Report Republic Speak: Where would you like to start? Well, a blowout jobs report? More government jobs! More part-time jobs! More [Modern Monetary Theory!]( Dig below the headline numbers, and you’ll see real economic damage, but a political class that cannot explain their theories to the public. I know what they’re doing. These advisors are in the MMT phase—just pumping money into the system, arguing that the government should supply capital to create jobs. Eventually, the government will tax the money back… they say… (what did you think they hired the IRS agents to go after wealthy Americans? No, it’s a feature of the system - enforcement.) But good luck explaining this model to the public, which barely understands monetary or fiscal policy. If these alchemists keep this up, they will do something worse than cause a recession. We’re heading to $40 trillion in debt by 2026. But don’t worry… they all have PhDs… we’ll be fine… If you’re interested in a more interesting way to evaluate employment in America, read the “True Rate of Unemployment” at the Ludwig Institute for Shared Prosperity and how they define functional employment in America. [It’s rather eye-opening.]( Stay positive, Garrett {NAME} 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. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. 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