More Monetary Base Perspective

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  • Post category:Macro Data

Here is the chart shown the other day, with the S&P 500 diverging from its sustaining Adjusted Monetary Base (AMB).  Bulls will proclaim that the economy and the stocks of companies that make up much of the economy are ready to go the organic route; the Fed has removed QE because it is no longer needed.

When they do the same with ZIRP and reward savers for doing their patriotic duty in bailing out asset owners, further enriching the richest 1-2% beyond any time in history, then we can talk about that.


Moving on, gold has been under attack in a ginned up macro phase, beginning with Op/Twist’s painting of signals and through to the current time.  Here is its view as adjusted by the monetary base.  Imagine that, since mid-2012 gold has utterly failed to protect people from the rampant increase in money supply.


By contrast the S&P 500 has gone absolutely nowhere as adjusted by Monetary Base, but at least it kept even.


When the S&P 500 rises vs. the AMB, then it will indicate to be an organic recovery and a healthy stock market.  Until then, it’s FrankenMarket.  The proof is in that horizontal line from 2009 to the current day.  Data don’t lie.

I am making no comment about gold in this post.  It has been putrid as a money supply inflation guard.  But I am making a comment about the stock market.  It has for 6 years needed something that the Fed has now removed.  It’s go time… Real or Memorex.