Billionaire venture capitalist Chamath Palihapitiya says staying bullish on the markets will pay off, pointing to two key financial factors driving his conviction. In a new episode of the All-In Podcast, Palihapitiya takes a close look at the M2 money supply chart, which has been on the up and up. The billionaire notes that M2 growth is one of the key reasons why the S&P 500 is in the midst of a strong uptrend. “If I was a betting man… I think the free money trade here is to be levered long. I think you can make a lot of money right now. Why is that? The first chart I want to show you is the velocity of money… This is the M2 money supply. It’s a measure of how much money is circulating in the economy. What this shows is the impact of rates, where we were able to start to slow down and contract the money supply. But then as the economy stabilized and people started to project what was possible in 18 to 24 months, you started to see money coming back into the system. That’s what has given a bid to the equity markets.” Source: FRED The billionaire is also keeping a close watch on the amount of money invested in money market funds, which are financial instruments that provide yields that are largely influenced by the prevailing interest rates set by the Federal Reserve. Palihapitiya says that once the Fed starts cutting rates, trillions of dollars in capital stashed in money market funds will likely be invested in the stock market. “Look at how much money is sitting in money market funds, and what this starts to show you is you have trillions of trillions of dollars of dry powder in the sidelines that will need to find a home. I think that [Fed chair] Jerome Powell is in an increasingly [untenable] situation because he will be looked at as politicizing the office of the Federal Reserve. There is enough data that can justify cutting rates. If you cut rates, two things will happen. Number one is people will take some amount of money out of the money market funds because they will want to go and seek superior returns somewhere else. It will increase the velocity of money at the same time. You put those two things together that is a bid to the equity markets. And so if we’re at an all-time high today with rates at 4.5% and Powell’s back is against the wall to cut, the only road from here is probably up… I think if Powell starts an aggressive cutting program… you could see the S&P 500 at 7,000.” Source: FRED As of Monday’s close, the S&P 500 is trading at record-high levels of 6,204. Follow us on X , Facebook and Telegram Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox Check Price Action Surf The Daily Hodl Mix Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing. Generated Image: Midjourney The post Billionaire Chamath Palihapitiya Believes a ‘Free Money’ Trade Has Arrived, Says Trillions of Dollars Needs To Find a Home appeared first on The Daily Hodl .
