Todd argues that the $3 trillion sitting in retail money market funds — double the pre-pandemic level — is effectively trapped. It won't chase the bull market, and the only catalysts to release it would be Fed funds dropping below 3% or a 30%+ market crash that paradoxically drives money INTO stocks. ✦ AI generated
Todd · The Compound · 2026-08-14 · original ↗
starts at this moment · 43:14
I said early on when interest rates went all the way up and all the money went into cash that this money was stuck. Not literally stuck, but it was going to stay put. that it was not going to come out in the event of of of a stock market boom. ... it this is $3 trillion in total retail money market funds. And for retail for context, it was $1.5 trillion the day before the pandemic started ... I do think that this generation of investors will not run out of the stock market.
verbatim transcript · starts at 43:14
43:14Uh >> cash. >> This is interesting. >> What you got? >> Um I got a lot I get a lot wrong, but sometimes sometimes I get things right. And this is one of them. >> Okay. >> That I said early on when interest rates went all the way up and all the money went into cash >> that this money was stuck. Not literally stuck, but it was going to stay put.
43:32>> Yeah. that it was not going to come out in the event of of of a stock market boom. I did think probably if you said, "Well, what if the tenure is at 4.9?" I probably would have said, "Yeah, then then it'll probably go into bonds." Nope. >> No. You need uh you need Fed funds below 3%. I think for this to unstick. >> So, that I could have foreseen that you
43:52you would have the stock market boom, you would have interest rates going higher, you would have the Fed funds rate coming lower. And still, it's not leaving. >> Yeah. Yeah. I think get down to 3% or a massive stock market correction like you know real >> doesn't this line does does this line go higher in a correction? >> No, I think the opposite. >> I when you so let's just say these
44:15>> people get scared and they pull it into their bank out of the money market. >> No, I think I do think that this generation of investors will not run out of the stock market. Wait. So for people listening, >> it this is $3 trillion in total retail money market funds. And for >> retail >> retail for context, it was $1.5 trillion the day before the pandemic started,
44:40which is 6 years ago, a little more than I think if you get a 40 if you get a 35% >> meltdown in the S&P 500, money will come out of money market funds and go into the stock market. And that's probably never happened before. >> I could see that. And then if if you >> are we all saying the same thing here? Are we saying Dow 100,000?
45:02>> All it has to do is fall 30% first. [laughter] >> Yes. Is that what we're saying? >> Basically, >> right? >> If if you told me Fed funds rates were going to be below 3% along with that, then yeah, that move's coming out. Uh that's what that's what happened in 200. >> If it still doesn't move, what if it just never moves again? >> People just got lazy. I don't know.
45:19Um, a lot of the economy runs on borrowed money versus uh spent money. It's It's very different now. I'm not saying that's good, >> but I am saying people are doing things with their assets without their assets having to be sold, >> like buying the Lakers. >> I mean, basically, >> can [clears throat] I ask you guys a question? So, what the S&P 500 is at an
45:38all-time high today? >> Okay. >> I'm not even sure where the Dow is. Is the Dow at 56,000? I really have no idea. >> I don't. >> Do you want to know exactly? >> I'm not a big Dow guy. Well, I am. >> Well, you just said Dow 100. The thous. That just reminded me. I really don't track it. >> No, I think it's 48,000. But hold on.