A followup to our most recent report: http://caldaro.wordpress.com/2012/04/10/feds-monetary-base-quick-update/. Recent data suggests Primary wave IV, of the monetary base, bottomed at $2.605 tln. The last two bi-weekly reports have displayed an overall increase of $90 bln. Which usually indicates the early stages of another rise.
Since the fifth waves of each significant wave, this is Primary V, have all been quite short. It is difficult to estimate where the monetary base will top out. Our original estimate for Primary III was $3.0 tln. A small five waves up from the recent low could achieve that level for Primary V. We are still not expecting a new QE program. However, the FED has been quite innovative these past few years, and may surprise with another program that does not dramatically increase the balance sheet.
Hi Tony,
Has $TNX confirmed Primary C? I noticed the different labelings between the weekly and daily chart. TIA.
We believe it has
I was about to feel bullish about next week until we got this big blast into the close. Doesn’t feel right to me. Methinks everybody heading into the weekend on the same side of the trade.
I really wish VIX wasn’t so low right now. zero fear in the market = fear in me
I’m going to try really really hard to stay off the blog for a few weeks.
U guys have a great weekend !
oh my Lee, don’t try too hard….cuz we’ll miss you too much. Enjoy !!
Oh heres everybody
Any predictions for tomorrow Lee ?
Yes rain in the morning and then Sunshine the rest of the day.
Looks like a really nice Saturday in the works
Everytime i log in ur at the lake
i wish life was so easy too lee
have fun
Life is easy it the living part we make hard
I see green
Markets this week
Never short a boring market
U caught the blast off V
I would set a price alert and just have fun
Agree. Maybe the FED will sell USB’s and buy MBS next.
Gross, PIMCO, is already positioned for that.
Go figure….Guy looks like Mr Burns from the Simpsons
Yeah, the guy with all the $$$
yuuup
Great quote from Mr. Burns: ” You know Smithers, I’d trade everything I have for just a little bit more”
Best
Dave
Hm. Interesting.
which says the fed is pushing at the end of a string (or wet noodle):
You should also look at the M1 multiplier
http://research.stlouisfed.org/fred2/series/MULT
yeah, but I think why Tony focuses on this is that while the multiplier impacts the real economy, the money supply alone can influence the stock market, regardless of the positive/negative/absent effect on real economic activity
No I got that. I have no trouble seeing that people would rejoice and make dumb decisions based on FED printing. But I am not certain if we are really at the cusp of a new multi decade bull market or if we need to get the balance sheet in order first. And for THAT, it matters very well.
Obviously we have a debt bubble. More drugs won’t cure the addict. It makes them feel good for a quick pop, but going through rehab will do that. Another fix is what the druggy wants (to get over the hangover), but a responsible caretaker (FED) should do the right thing instead.
I try not to insert my opinions of “right” or “wrong” with where the market might go. I don’t personally like what the Fed is doing, let’s make that clear. But my opinion doesn’t matter, at least not to the Fed or to the market. The only thing left for me to do is just make sure my account goes the right direction, and complain about economic philosophy on my own time.
I doubt few here would suggest that Fed liquidity is curing anything. In fact, I’m pretty sure Tony expects this bull run to top in the next year or two and then give back something big (40+%). That doesn’t sound to me like his count suggests any long term fix created by current bank activities.
If having my account go up when the market is going up and not go down when the market is going down equates to a “dumb decision”, then I’ll gladly be dumb all day long!
Actually I read that chart differently.
Mid-2011 was an important low.
Looks like it’s in a long term uptrend now.
In regard to the FED’s balance sheet.
This deflationary episode started with $800 bln on the books.
Now it is close to $2.7 tln.
With Gov’t debt as it is, I seriously doubt there will be much unwinding in the future.
Managing excess reserves, and which Bonds are held, will likely be the new tools in the FED’s toolbox.
Hm. Thanks Tony! I noticed the upslope as well, but I have no clue how accurate these plots really are. Just to clarify, I am not positioned for doom and gloom and frankly, the risk off trade (bonds, dollar) seems a bit crowded to me as well, so I definitely can see your point. I just believe that more easing isn’t necessarily what is necessary and Bernanke knows it.