Postcards: A Bad Sign for the Market

The most important players at public companies are sellers... not buyers... and the trend is the worst in three years. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ 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: A Bad Sign for the Market]( The most important players at public companies are sellers... not buyers... and the trend is the worst in three years. [Garrett {NAME}]( Jun 5   [READ IN APP](   Market Update: Energy is getting hammered and tech is continuing its momentum trend. But the S&P 500 is at a new all-time record, and momentum is again positive. That may not last very long. Let’s see how the market reacts to the May jobs report… Oil’s back at $75, which is where I prefer to invest… but there’s a long road ahead with OPEC bringing back its production in the second half of the year. Dear Fellow Expat: With apologies to readers. A small fender bender threw me off Tuesday afternoon, and I’ve been trying to get that addressed. Of course, someone banged into the back of my car on the first day after closing. At least it wasn’t serious. I’ve returned to my home this afternoon in a wave of wet weather. I supposed the humidity, and the rain followed us north. My daughter is currently trying to braid a doll's hair—she is learning that process—and it’s not going well. She has her father’s short temper over things that don’t matter. It’s never the big things that bother me… It’s always the little things. It’s funny how hereditary some of these things are - but we know some things are learned. The accident didn’t bother me. It’s a car… And not one that I particularly like. My boss told me hours before this accident that he wanted to put this Honda in a Crash Derby. That’s high praise for my vehicle selection. Tomorrow, I’ll probably work from an auto shop… lucky me. And I’ll be delivering my Republic Insider tomorrow instead of today… What the Insiders Are Telling Us? Today, we had an interesting discussion (with several analysts) about the risks and challenges in the market. China remains a problem, even though liquidity continues to expand in the global arena. How long that will go will be determined - but the best guess is a problem with U.S. debt levels next year, and liquidity peaking in late 2025. An invasion of Taiwan from China would likely crush the markets - as any massive shortage of semiconductors would create a new set of supply-side challenges. But I always return to one of the best gauges of price and optimism in the market. Are executives buying their own stock? The answer to why they would buy is because they expect the stock to go up… But what about selling? That’s always one of the harder questions to answer. Sometimes, executives are paid in stock. They’ll sell other times because they need to put a kid through college. On the aggregate though - when there’s more selling than buying - it takes us back to the fact that… stocks are expensive. And right now… the amount of selling compared to buying on a dollar-by-dollar level… It’s the worst in years., though, when there’s more selling than buying, it reminds us The blue line is the five-day moving average of net buying to selling… as you can see we haven’t had this level of selling since July 2021. An Economic Storm The writing is clearly on the wall for the economy. Most Americans believe that we’re in a recession. We’re not in one - because the academic definition shows we’re still experiencing nominal growth. But it’s a real problem when we’re borrowing $2.50 to generate every $1.00 in growth. So, take that as you will. We continue to see problems… Existing homes, job openings, hiring, consumer sentiment, and temporary employment are contracting. Industrial production, industrial capacity utilization, building permits, credit, and non-financial profits are declining. This can help explain the lack of buying at the corporate level. The private economy is under a lot of pressure… and interest rates are an albatross on corporate debt if the Fed can’t get rates lower into next year. Econ Pi also breaks down the Mean of Coordinates and finds that the figures align with previous recessions in how quickly the economic has stalled. So… we have leading indicators in contraction… and the mean of coordinates rivaling the slump in 2001. The S&P 500 is at all-time highs, matching record debt and liquidity levels. Something has to give eventually… and executives are setting their expectations by sitting out this rally on the aggregate. Continue to watch our signals in the morning and the afternoon. It feels like something significant is coming. The problem is that trying to bet against a momentum market can lead to quite a negative outcome. You might eventually be right… but the question is whether or not you’re solvent. We’ll keep sharing our signals and looking for any weakness in liquidity - as that would be the first sign of something bad on the horizon. 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. 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.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()