For those who may remember and miss Michael Pollaro’s blog centering on the True Money Supply (TMS) at Forbes, I keep tabs on his updates in a private email group and will occasionally post with his permission.
G3 TMS continues to decelerate, though ever so slight, with Euro TMS ticking down 20 bps in Jan to 6.5% YoY, while US TMS remains at a modest 3.4% YoY through 3 weeks in Feb (same as Jan). However, the market’s refusal to break down into this now multi-year liquidity deceleration is telling us there is still too much liquidity in the system.
I have made some additions to the charts, now showing commercial bank credit vs TMS for both the US and EZ. Interesting that the EZ and US show similar end of cycle TMS deceleration/bank credit acceleration dynamics into busts/recessions. And that is what we are seeing now.
As far as bear watch goes, though very close, I still think we are not there, just yet.
I have encouraged him to start blogging again but for now I’d like to pass on his data and brief thoughts. Click to expand the graphics to full size.
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