Postcards: The Rise of Wall Street South

Florida's fast becoming a massive hub for finance... plus with momentum turning positive - markets experienced a dramatic squeeze higher on Tuesday. Stay cautious - as this cycle isn't over.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Postcards: The Rise of Wall Street South]( Florida's fast becoming a massive hub for finance... plus with momentum turning positive - markets experienced a dramatic squeeze higher on Tuesday. Stay cautious - as this cycle isn't over. [Garrett {NAME}]( Nov 14   [READ IN APP](   Dear Fellow Expat: Miami feels like it’s part of a different state - even country. Though Alligator Alley - two hours of Interstate 75 - separates (and connects) Miami to Naples, Florida, you know immediately that you’re on the East Coast the second you make it there. Traffic zooms by at 100 miles per hour. Countless overpasses zig and zag-like parts of a spider web. And it would take me two years to fit into the tight white pants and floral shirt worn by a mid-40s man I saw the last time I visited. Miami’s a much faster pace than this portion of the Florida Republic. On the West Coast, the restaurants close earlier, the Gulf of Mexico is calm, and the median age of the residents in Naples… is 66.3 years old. In Miami, it’s 39 years old. But one of the things they both have in common… is money. Naples has long been a playground of the wealthy - and every house built on the block is bigger - almost like the new owner was in a contest with their neighbor. It’s become a hub for family offices, institutions, and wealth managers. If you’ve been here long enough, you’ll notice that a handful of community banks that catered to small businesses in the 1980s and 1990s have converted into wealth-management offices. Miami has been a hub of new money for decades - but it’s about to get a facelift. Welcome to Wall Street South Ken Griffin founded Citadel, a hedge fund that recently departed my old second home of Chicago for Miami. My wife once taught Griffin’s kids in Chicago in an afternoon school program. His daughter famously blurted out that their mother (Griffin’s ex-wife) wasn’t allowed on his plane anymore. Griffin moved his company to Brickell Bay and bought himself a $109 million home in Miami. That was a record for waterfront real estate. He’s become the richest person in Florida (home of no state taxes) and reportedly plans $1 billion real estate development around his company’s offices. He’s not alone in his journey to creating a billionaire enclave. Peter Thiel is moving here. Jeff Bezos just announced plans to leave Seattle for South Beach. Dan Loeb spent $20 million on a waterfront mansion. Venture capitalist David Blumberg is on his way. Other new residents include Carl Icahn and his company. Oh… and don’t forget Charles Schwab - the man behind the brokerage. Griffin is so adamant about Miami’s future that he suggested that Miami may replace New York City as America’s financial capital in the decades ahead. If that’s so, real estate prices are heading higher. But also, infrastructure will start to emerge that could facilitate it. It’s not just the taxes in New York but also the crime and weather in big cities like Chicago. [For 100 years, progressives in Chicago]( have aimed to create special taxes on financial hubs like the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME). Recent budget suggestions in Chicago demand a 1% to 2% tax on all financial transactions on contracts with [an average margin of probably five cents](. The head of CME has already said it is looking to Miami for the future, while CBOE would naturally find a home in Kansas City, where it owns the BATS Exchange. CME also sold all of its buildings. “In our leases, we have a language in there that says if there’s something that’s ill-conceived from the city or the state, that our leases are null and void,” [CME CEO Terry Duffy said]( May 2023. “We’re in a very strong position. If we had to leave, we could leave.” If COVID taught us anything, it’s not just voters who will vote with their feet. Businesses will also, and with trading easier than ever through digital networks, Florida will find far more favor as Wall Street South in the future. I’m looking forward to welcoming more big firms to both coasts. The Squeeze is On Today’s market move was significant - the biggest I’ve seen regarding Equity Signal Shifts in 18 months. The Consumer Price Index (CPI) came in lower than expected, setting off a frantic round of buying that ended with the Dow up more than 500 points. With so many funds still net short, we’re seeing another big round of covering. It’s unclear how or why these funds don’t catch the pattern. Similar short-covering happened in June 2022 and October 2022. When we see oversold territory on the S&P 500 - as we did at the end of October - markets have enjoyed a squeeze higher. This is why I implore anyone who is trying to short the markets (though I never advise this) to pay attention to the Relative Strength Index (RSI) and the Money Flow Index (MFI) of the S&P 500. When the RSI is under 30, it’s oversold. When the MFI is under 20, it’s oversold. And when both hit that level, the market turned around on a dime from short-covering and dip-buying among algorithms. What’s interesting now is that the S&P 500 and the NASDAQ are nearly overbought on both metrics. If the markets can continue this momentum, be careful. There’s still a lot of negative news - and the economy faces challenges heading into 2024. [Upgrade to paid]( If you want to know when and if it’s time to hedge or take gains, [check out Republic Risk Letter]( which tracks key indicators across 11 sectors and the three major indices. I’ll dig deeper into the other two metrics we use to discover breakouts tomorrow morning in the letter. Meanwhile, when our signal turned positive, [we saw many names on our list]( of highly shorted stocks squeeze much higher. Carvana ([CRVA]( surged 16% today. Beyond Meat ([BYND]( added 6%. C3.AI ([AI]( popped 7%. Upstart ([UPST]( rallied 16%. These companies all have ridiculously bad valuations and serious challenges in the future. Fisker ([FSR]( - for example - plunged 18% today after announcing major production cuts from the EV sector. It’ll eventually go out of business or get bought for very cheap. But we’ve seen repeatedly that when our signals change… [junk stocks like Beyond Meat]( can create a handsome payday. Stay positive, Garrett {NAME} Secretary of Defense You're currently a free subscriber to [Postcards from the Florida Republic](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()