Posts Tagged ‘M2’

Money Markets are the New Suspenders

Money Markets are the New Suspenders

By EB, courtesy of Zero Hedge

The Financial Times recently reported on the Fed’s latest exit strategy to eventually contain the inflation zombie:

 During the crisis, the Fed created roughly $800bn of additional bank reserves to finance asset purchases and loans. This total is likely to rise in the coming months as the central bank completes its asset purchases and the Treasury unwinds financing it provided to the Fed. Fed officials think they could raise interest rates even with this excess supply of reserves by offering to pay banks to deposit their surplus funds with it rather than lend them out. However, they also want to use reverse repos in tandem to soak up some of the excess reserves. Policymakers call this a “belt and braces approach”. [The latter, clearly a nod to the great Gekko.]

nice suspenders, zero hedgeTD touched on this last Thursday, and we will expand upon it here as it is particularly relevant to our ongoing theory that it is the proceeds from permanent open market operations (POMOs) and their close cousins that are driving equities.  Though this may be received wisdom to ZH readers, the Fed has done us the favor of providing additional evidence through the FT story.  A bit of background, as we are new contributors to this forum:

Money Supply:  Based on our previous research on the effects of swings in M2 non-seasonally adjusted money supply (M2) on the stock market, we were a bit surprised in July 09 by the resiliency of the rally, which continued in the face of such a dramatic contraction in M2.  The dismal Durable Goods report from last Friday confirms that the capital goods sector is still under significant pressure as a result of a lack of money in the general economy.  With banks not lending to normal businesses and consumer credit contracting equally as violently, what is the basis for this rally and from where does the never-ending flow of equities juice flow? 

Bank Non-Borrowed Excess Reserves:  The Fed statistic that most closely correlates with the 2009 equities run-up appears to be bank non-borrowed excess reserves (bank NBER), which


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Phil's Favorites

This Time It's Different: Maybe? ...John Street Capital Joins Me On Panic With Friends

 

This Time It’s Different: Maybe? …John Street Capital Joins Me On Panic With Friends

Courtesy of Howard Lindzon

(Originally posted on July 10, 2020)

This made me laugh yesterday…

In the shoulda, coulda, woulda department today…a $500,000 investment in the Amazon IPO would be worth $1 billion today if you held it.

Onwards&helli...



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Biotech/COVID-19

How deadly is COVID-19? A biostatistician explores the question

 

How deadly is COVID-19? A biostatistician explores the question

The number of confirmed and probable deaths from COVID-19 in New York City was 23,247 as of July 10, which is more than eight times the number who died in the 9/11 attack. Angela Weiss / AFP via Getty Images

Courtesy of Ron Fricker, Virginia Tech

The latest statistics, as of July 10, show COVID-19-related deaths in U.S. are just under 1,000 per day nationally, which is down from a peak averag...



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Zero Hedge

Taleb: Tail-Risk Hedges Are Now A Necessity

Courtesy of ZeroHedge View original post here.

Authored by Michelle Jones via ValueWalk.com,

Tail risk hedges are designed to only pay off when the markets suddenly plunge, so many investors don’t have the stomach to carry them. However, one expert on tail risk funds advises investors not to be in the market right now if they aren’t using a tail hedge.

No V-shaped recov...

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Digital Currencies

Chainlink Crypto Surges To A New All-Time High - Here's Why...

Courtesy of ZeroHedge View original post here.

Authored by Joseph Young via CoinTelegraph.com,

Surging volume, price discovery, and new partnerships pushed Chainlink price to a new all-time high at $8.48...

image courtesy of CoinTelegraph

...

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The Technical Traders

Gold & Silver Measured Moves

Courtesy of Technical Traders

The next few weeks are certain to attract much attention to precious metals.  Hardly anyone can argue that Gold has not experienced an incredible upside price rally over the last 12+ months.  Recently, Gold closed above $1800 for the first time since 2011.  Our researchers believe the next target is $1935.  Keep reading to learn why we believe this is the next major price target for Gold.

Gold Weekly Price Analysis

Over the past 18+ months, Gold continues to develop price patterns that seem to be replicating going forward.  This pattern consists of an advance in price followed by consolidation/rotation in price to set up a new momentum base.  The example of this price advance ...



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ValueWalk

How Banks Can Mitigate Credit Losses

By David Donovan. Originally published at ValueWalk.

Without question, the economic impact caused by COVID-19 has rocked companies and consumers across the globe. Big companies are drawing heavily on credit lines. Mom and pop shops are struggling to stay afloat, despite the government funding small business loans to the tune of $659 billion, of which $130 billion is still unclaimed. Companies are now trying to figure out how they can proactively address high risk borrowers to avoid massive defaults that will inevitably putting banks in an even stickier predicament.

Q2 2020 hedge fund letters, conferences and more

With more than 40% of the econo...



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Kimble Charting Solutions

Commodity Index Price Reversal Raises Hope for "Double Bottom"

Courtesy of Chris Kimble

It’s been a rough decade for commodities… but there may be light at the end of the tunnel.

As you can see in today’s chart, the Equal Weight Commodity Index made new decade lows this spring at (1).

In general, this is bearish. BUT, prices reversed higher with a little attitude. Precious metals has been strong and crude oil is well off its lows.

This has given life to a potential double bottom pattern, as this year’s lows came in and around the 2009 financial crisis lows.

Is it possible that Commodities have created a long-term double bottom at (1)? Poss...



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Chart School

Dow 2020 Crash Watch - Update

Courtesy of Read the Ticker

Like 1929 the markets have bounced. This time it is on the back of the FED $6.5T money printing.

Previous Post: Dow 2020 Crash Watch 

But can the FED blow $6T every time the market rolls down to test support.

Yes, maybe before the US 2020 elections the FED will do 'what it takes'. But post elections not so much, the year 2021 is a long way from the next election (presidential or congress) and defense of the markets may not be so supportive at $6T or $10T per market smash. The FED may hesitate, and that will be window for stocks to break lower.

The 36 month simple moving a...

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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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