| Ripple Effect — May 20, 2025
Markets opened lower on Monday, but closed the day green. Why? Because retail investors continue to aggressively buy market dips.
In the morning, yesterday, an analyst at Morgan Stanley suggested that any drop following Moody’s downgrade of U.S. credit from AAA to Aa1 would be temporary.
Sure enough, investors came into the market in droves by lunchtime.
But what’s most interesting in our current V-shaped market recovery is what’s missing: The Federal Reserve.  During the 2020 and 2008 bear markets and V-shaped recoveries, the most significant driver wasn’t retail investors – it was policymakers, opening up the monetary spigots.
Both times, the Federal Reserve’s balance sheet soared.
Perversely, the lack of monetary intervention in this market bounce is good news. Investors are pushing markets higher, not money created out of thin air.
Markets may make a new all-time high in the coming weeks at the rate they’re going.
But if you’ve got a bit of contrarian in ya, markets pushing higher on retail buying is likely also raising the hair on the back of your neck a bit. Caveat emptor.
-Addison P.S. Gold prices are perking higher amid this latest brewing crisis. We still see the strong possibility for gold prices to soar. As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
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