Milk Road Macro Why The Fed is Pouring Fuel on This Bull Run w/ Bill Fleckenstein
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Oct 30, 2025 In this discussion, Bill Fleckenstein, a legendary hedge fund manager known for his market insights and successful short-selling, reveals why the Fed's recent rate cuts may not significantly impact the market. He explains the dominance of passive investing and its role in driving the bull run. Bill also shares insights on the dangers of uncertainty surrounding Fed policy, the complexities of valuing gold and mining stocks, and the importance of cash reserves during volatile times. His seasoned perspective offers valuable takeaways for navigating today's financial landscape.
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Passive Bid Has Replaced The Fed
- The passive bid from index and target-date funds now drives daily market action more than Fed policy.
- This mechanical buying pushes prices higher regardless of fundamentals until flows are overwhelmed by selling.
Understand Passive Flow Mechanics
- Learn how passive flows (BlackRock, Vanguard, 401(k) defaults) mechanically buy cap-weighted stocks every inflow day.
- Use that knowledge to prepare defensive plans before a passive-driven unwind begins.
Tipping Point: Exponential Flows Then Collapse
- As passive market share approaches ~60–65% flows can become exponential and fragile.
- That same dominance implies any large negative shock could trigger a rapid, painful collapse.
