New monetary policies like QE have muddied the water somewhat when looking at monetary aggregates like M2. We have a simple adjustment we make to M2 to improve the optics on bank credit.
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Over the last year, between the FRB and commercial banks, around $500 billion in net new real estate credit has been extended. That is the good news. The concerning part is that the FRB has accounted for over 100% of all real estate credit created.
Read MoreThe US Dollar (USD) has turned against the Euro…check. It has turned against the GBP…check. It has turned against the Yen…check. It has turned against the Swiss franc…check. And, lastly it has turned against gold…check.
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The BOJ balance sheet has increased some 39% over the last year and the monetary base has increased about 46%. But, like in the US, the Japanese banks have just been parking their excess reserves right back at the BOJ.
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Inflation in the Spain and Italy is plunging at rates reminiscent of 2008-2009. From StreetAccount:Draghi says ECB guidance allows rate cuts on volatility: Bloomberg cited comments from ECB President Draghi, who said that the central bank’s pledge to maintain rates at low levels explicitly allows for cuts in lending costs if market volatility resumes.
Read MoreOver the last three months, the ”beta trade” has been on. We slice all 1,600 companies in the MSCI World index into deciles from lowest beta to highest, and then we measure the performance of each decile.
Read MoreWhile all major European markets are currently positive so far this year, equity performance has been led by Greece, Ireland, and Spain:
Read MoreOver the last 3 months, every bank in Europe has outperformed the MSCI World Index, some by 50-70%. Two-thirds of the companies sell for below book value.
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Even after the non-taper and government shutdown, TIPS yields are holding at an elevated level relative to recent trends. Have TIPS yields reset to a new range?
Read MoreWe often group stocks into either cyclical or counter cyclical baskets based on their GICS sector, and then measure the attributes of each group. The below chart shows the 20 day volatility of the counter cyclical basket of stocks relative to the cyclical basket.
Read MoreWithout any decisive economic data to influence its actions one way or another, the BOE opted to maintain its benchmark rate and the level of its bond-buying program:
Read MoreQuest Diagnostics estimated today that their 3Q EPS will be below analyst expectations. This has sent the stock lower in light of the rally today.
Read MoreA similar chart to one we posted last week that showed the percent of stocks trading above their 5 year average valuation, the one below shows the percent of stocks that are trading within 25% of their highest valuation level over the last 5 years.
Read MoreInitial unemployment claims were hit by a variety of ”one-off” factors including an IT upgrade in California and temporary layoffs in the private sector due to the government shutdown. The 4-week moving average moved from 305k to 325k.
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Today Citrix Systems is down over 11% in early trading after pre-announcing a Q3 shortfall in both revenue and earnings. This will likely lead to the stock breaking down in our relative strength point an figure charts, dropping below a three year old trading range.
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