$60 Billion Just Piled Into The Riskiest Trade On Wall Street

本站添加: 2026-05-31

[00:00:03]One of the most common places you will find a chart stolen that's floating around the internet is from the website Zero Hedge. A lot of people like to borrow their research and don't properly site them, but usually their information is citing another bank, whether it's Goldman Sachs or JP Morgan, because they have direct conversations directly with trading desks. So today I'm going to talk about one chart that's been popping up on my feed that absolutely tells you everything you need to know about how fragile this financial system is. The leverage, the financialization, the fact that our best engineers no longer build bridges, but instead leveraged ETFs and other things because that's where the incentives are in the economy. My name is Garrett Baldwin. I am the editor of Me and the Money Printer and Postcards from the Edge of the World on Substack.

[00:00:54]And today I'm going to show you a $60 billion chart that should stop you in your tracks because you need to understand today that Wall Street has built what we are going to call a $60 billion doomsday machine. Now here is the chart. This is Goldman Sachs and Bloomberg. This is coming out of Zero Hedge. So please know that I am citing them. Global assets in leveraged and inverse stock ETFs. These are products that give you two to three times the daily move of a single stock. Look at the side of the chart right over to the left. 20 billion in January 2025. Now pushing all the way through to 60 to 65 billion.

[00:01:39]It's just gone vertical particularly in the wake of this momentum reversal that we flagged on April 7th of this year.

[00:01:50]now over $60 billion. And here's why that matters. It doubled since the start of April. That near vertical line is 2 months of money. And here's why all of this really matters. Where does the $60 billion even live? About 70% of it, 46 billion is in the United States. 13 billion is in Hong Kong. And 10 billion of that just showed up in the last 2 months. and Korea 3.3 billion listed in their very first products this week. And let me tell you what the people are chasing. The single largest leveraged single stock ETF on the entire planet right now gives you two times exposure to SKHEX, a Korean memory chip company.

[00:02:37]The new Korea listed funds for SKHENX and Samsung pulled in $1.2 2 billion and $816 million within 2 days of launching. Now, why does all of this matter? Because this is Drram Computer Memory. It is the fastest growing ETF theme of all time.

[00:02:57]So, all the thematic work that was done by Kathy Wood, eat your heart out. two days memory chips fastest growing ever.

[00:03:05]sit with that right now as we move into the next part of our conversation. And that is what was told to Zero Hedge by a someone from uh what we appears to be the Goldman desk saying that well now the Goldman is saying they have no take on the demand. But they quoted a veteran trader and this is the line that gave the whole piece its name. quote, "This won't end well, but going off the ride early is potentially existential for some traders." So, read that again because everyone knows it's going to end badly, but getting off early, being the one who steps away from the top could end your career if you are wrong by even a week. So, nobody steps off. And that's the most dangerous sentence in all of markets because that's how mania operates. Now fortunately we keep a very close eye on momentum at money printer pro. We have seen our signal go negative before significant sell-offs like the co selloff, Silicon Valley banking crash, the August 2024 Japan crash, South Korea's crash decline earlier this year and of course the trade downturn of April 2025 and the most recent gold and silver leverage declines that happened after our signal went negative 2 days after January 28th. So we are recognizing that yes there is timing to this in some capacity but at the same time everyone is afraid to get off the ride at the same time which can contribute to things moving higher. And the real point of this conversation is not really about what Goldman said. What I want to explain to you is why I watch these ETFs, why these ETFs are so important, and how you can use them to time momentum and also know when it will be likely time to hedge in the event of a potential larger sell-off. And I invite you to go back and look through some of the slides, continue to look at what happened on February 21st, 2020, 3 weeks before COVID really became a problem. the SPXL, which is the triple bull ETNF for the S&P 500, it went negative under that 20 and 50-day moving average a week before things really started to pick up and two weeks before the shutdown. Pay attention to the FAF and the FAZ, which are the triple uh bull and bear ETFs for banking ETFs. A lot of movement happened right around March 7th of 2023. 4 days later, Silicon Valley Bank was gone. Now, why does all of this matter? Because a lot of people don't pay attention to what these ETFs do, and I follow them in a completely unique way that a lot of other people do. A reader emailed me this week and said, "Look, why do you even watch these three times levered ETFs in your morning notes?" And I and he says,"Why not just look at a normal one-time ETF?"

[00:06:06]Something like the XLE, which follows the select energy uh portion sector of the S&P 500. Isn't a one times cleaner read on the market better? And it is a smart question. And the answer is the whole reason why that zero hedge chart matters. One times ETF tells you what the market did, but this is really important. A three times ETF will tell you how badly people wanted it and whether the plumbing under it started to crack and with how much force and velocity they were actually preparing and trading in this environment. So these two things measure completely different things and this is a difference between ownership and urgency. Think of ownership as this one times ETF. Something like the Q's, the QQQ or the S&P 500 select ETF. That is ownership. This is where 401ks land, where pensions go. They buy it and they are price agnostic. They put this stuff on autopilot. It goes in every paycheck.

[00:07:11]That flow is sto slow. It's structural and it's completely indifferent to what happens on a given Tuesday. it will tell you the price and that's why everybody stares at the price. But the three times products something like the triple bull semiconductor which is the SO XL or the triple bull S&P or NASDAQ 100 that is the TQQQ or what I follow the FNGU for momentum that is a ETN that is built around largely fang stocks. A lot of people don't know what this stuff is.

[00:07:44]The OIOU. Well, they tell their names actually cattle on them. Nobody puts their retirement into the so XL. Those are momentum traders, gamma chasers, retail speculators who've been drinking espresso, too much of it, tactical funds that want maximum beta exposure to something like semiconductors. And I invite you to look at the so which has gone from roughly 50 to 250 in the period uh that all of this has happened. These products are the single clearest visible expression of emotional leverage in the modern markets today.

[00:08:20]And this is where the mechanic matters and it's the part that a lot of people miss. These funds do not just hold stocks 3 to one. They get exposure through swaps and futures, contracts that can control a big position with very little cash. And then they rebalance every single day to hit three times tomorrow's move. So if the index goes up during the day, the fund is forced to buy more exposure into the close. And if it goes down, it has to sell into that weakness. Nobody is making a decision about price. Nobody is making a decision about whether or not they believe that momentum will continue. They are chasing because that is what their pH pro perspectus tells them that they have to do. So in a quiet market who cares that doesn't matter.

[00:09:11]But in a trending market with significant momentum, this creates a feedback loop. And that is the key thing that daily rebalance becomes that feedback loop that dominates and is why if you look at the so we've moved from roughly 50 to 250 in roughly 6 to 8 weeks. Now on top of that that feedback looked this is just how it looks right.

[00:09:35]Step one is momentum turns positive. And momentum turned positive on the S&P 500 and on the SOXL on April 7th. It showed up on our reading at moneyprinterpro.com.

[00:09:48]The SOXL turns positive. Momentum chasers and retail buy the SO XL. Step two, the dealers who provide the SOXL exposure hedge by buying Nvidia stock underneath. Step three, traders watching Nvidia pile into zero date call options, the ones that expire that same afternoon. And state step four, the dealers who sold those calls are now short gamma, which means they are forced to keep buying Nvidia just to stay balanced. Step five, Nvidia rises and at the close, SOXL has to rebalance and has to buy even more exposure for tomorrow.

[00:10:28]And then step six, the next morning, the whole thing restarts, except the stock is already 3% higher than it should be.

[00:10:36]Isn't modern finance and the stock market wonderful? Were you told that this was supposed to be a long-term investment engine where people would put their money and ultimately over time you would grow and that there would be a thesis for everything? That's not how any of this works. It's built on liquidity and leverage and momentum and mechanical buying that in many ways is price agnostic and that is how you end up with these meltups. This is how one day moves can snowball into a 3-w weekek meltup. It is mechanical. It is not the result of Trump tweets. It is not the results of earnings. It is not the revol results even of forward expectations. It is a feedback loop that has continued to accelerate in and shorten patterns since 2008 and has picked up especially in the postcoid era. Now on top of this I do want to stress this as well pressure because that's what these products are really measuring not price but pressure.

[00:11:38]How aggressively traders are trying to force the move to happen. And when things explode higher faster than the underlying stocks, that tells you traders are pressing their bets hard and money is flowing easy. And that is exactly why I don't own them. The daily reset, the path dependency, the volatility drag, the decay, they all grind the long-term return below the under. As investments, they're terrible, but as thermometers, they're fantastic because the people who hold them are the most sensitive people to any change in liquidity, leverage, and confidence. And all of that uh metriculates into a single reading, which is momentum, which we measure on the S&P 500 level, the Russell 2000 level, the NASDAQ level, and then every single sector underneath it. That is how we end up understanding inflows and outflows and also helps us understand how violent these V-shaped uh recoveries can be and how they can overshoot where we previously sold off from a significant high and ultimately lead us into these 10 15 20% meltups that are just simply from a fundamental perspective not that terribly justifiable. Now, the big tell in all of this, this is the most useful part. The signal is not when they go up, it's when they stop. Because the three times products roll over before the one time does. And why? Because the guy holding the TQQQ has way less ability to sit through a rough Tuesday than a pension fund that owns the plain old QQQ. So when TQQQ, which is the triple NASDAQ 100 ProShares ETF, right, when that is outperforming on up days, when the SOXL fails to make a new high on a day, when the index itself does, when the FNGU volume collapses while the fang index still grinds higher, those are not random divergences. That is most aggressive buyers getting bored, getting stopped, and learning who their margin cler clerk is. The one-time chart cannot show you that because the one times chart is mostly pension money and people who are passive and largely asleep. And the core thing here is we've seen this movie before. The same machinery that makes the leveraged trading uh treasury basis trade work. The same machinery that lets stable coins absorb T bills.

[00:14:09]It's the same machinery that lets a leveraged ETF take in a billion dollars of retail money on a Monday and turn it into a more directional exposure than a cash should be able to buy. And the collateral keeps stretching until the tail starts to wag the dog. And we saw that happen with Volmageddon in February 2018. We saw it with leverage volatility products that unwound 18% on a signal afternoon. In March 2020, bond and oil ETFs traded at massive discounts to what they held. ARC, their entire spectrum unwound and a lot of things that were tied to leverage in that environment unwound. The regional bank ETFs in 2023 where the leverage funds, they were deteriorating before the public even heard the word banking stress. And that's exactly what I want to point out in a very simple chart because you can see it in real time. It doesn't hide in any capacity. It's there the whole time and it's in something as simple as the SO XL. So the SO XL is the triple leveraged ETF for semiconductors. And as I said, when momentum returned to this market, when momentum returned to this market, we saw a huge surge. and that actual feedback loop start. This has gone from 50 to as high as 240. And once again over here at Money Printer Pro, we saw momentum return right there. That green line turning positive to plus two, but our cap weight at 1.6. That's where momentum returned to the market. And that is what has uh coincided with that huge rally that has persisted since then. But let's go back further real quick to the SPXL and look at the triple leverage bull ETF around the S&P 500.

[00:16:01]Our momentum signal went negative on January 28th. Since then, that period, we saw a huge sell-off. Momentum returned back to the market. Same time, right, April 7th. What happened next? A lot of forced buying started. CTAs, volatility funds, they all had to step in. mechanical price agnostic squeezing higher. In November, we saw a significant amount of selling because of Japan. Japan stepped in and announced it was going to do 117 billion in stimulus.

[00:16:32]What happened? Momentum returned positive. We saw mechanical buying. This happened back here during the worst of the trade crisis. Momentum turned negative on February 21st. We sold off here. Insider buying picked up. momentum returned and buying started to pick up again and on and on and on. The downturn that happened back here with the knee collapse. What transpired all the way back here during of course the Silicon Valley banking crisis which again our signal turned negative on around March 6th. Nobody had heard of Silicon Valley Bank. Most people hadn't. And it was gone just a couple of days later. Of course you had the guilt crisis. Of course, you had the largest hedge fund sell-off and you had COVID which represents once again a momentum switch around the 20th 21st a huge downturn and then when momentum returned buying started up again this is the story of the market and it is the same thing over and over again and I feel like I'm taking crazy pills but the reality is that in this environment price agnostic behavior is really driving a lot of things and and it unwinds as quickly as it builds. So the bottom line here and it's important zero hedge chart showing $60 billion doubling in two months piling into two times SKH highinex and Korea memory funds that are just two days old. That is not just a number.

[00:17:59]That is a thermometer. And right now it is reading yellow. The one times will tell you what happened. The three times will tell you what the people who made it happy were thinking and how close they were to the edge of being able to do it. In a market that runs on collateral velocity instead of value, the second chart is the one that breaks first. So, respect the move and don't worship it. And one last thing, I would be foolish if I did not bring up this very simple last piece here, which is the GDXU. The GDXU is the triple leveraged ETN for gold. Well, what happened back on January 28th? Our momentum signal went negative. Gold fell dramatically because of the amount of leverage that was linked to retail. And in this situation, you saw that you also saw it with silver stocks. uh the SLV pulled back significantly, but the leveraged uh the leveraged uh positions in silver, things like the SIJ, right, had moved all the way up to 40, had collapsed down to 31. We all we but we saw a significant amount of movement on things like silver in the leverage position which was the I'm going back and trying to figure out except just stick with me. We got it.

[00:19:33]It is the AGQ. Forgive me. So the AGQ as you can see right here the ultra bull. Look at this collapse. This is two days after momentum turned negative. So there is your adjustment. That is a monstrous move down and roughly all tied to futures prices. So once again, core things to keep in mind is when this goes negative, when our signal goes negative, obviously we're going to be in an environment where a lot of this can unwind very quickly. So as always, check out me and the money printer on Substack. Please join us live very soon starting on June.

[00:20:12]What is that date? I've already forgotten it. Uh midJune. Let's just go with that with optionpit.com at 9:20 each day. Get our momentum scores at moneyprinterpro.com.

[00:20:22]And of course, like and subscribe on YouTube. Sorry about the uh windown.

[00:20:26]That was interesting, but I don't edit anything. I think it's funny. I think it's entertaining. And I hope you got a lot out of this today. I will be back as always with my team at Money Printer Pro live each morning at 8:30. Everybody, do me a favor. Stay positive.