SPX Divided by Money Supply SPX back in the resistance / distribution zone for the SPX over money supply on a bearish divergence. September / October will be interesting
M2
SPY vs Money Supply 2000-2021Pivotal events of the last two decades compared with the S&P and the money supply. M2 is a broad indicator that includes cash, checkings, and liquid assets such as money market securities and cash equivalents. Although M2 exploded 42% during the COVID pandemic, much of this money is locked up in FED REPO agreements and artificially inflated on the Fed balance sheet as indicated by the velocity. Velocity is an indicator of the speed at which a unit of currency is exchanged in the broader economy.
Bitcoin should be charted against M2If the m2 money supply increased by 40% within 1 year, wouldn't make sense that the bitcoin price would be 40% higher than it normally would be. This chart shows a macro price target of around 188k priced against m2, which would give a normally priced bitcoin target around 250k.
SPX SPY ES - Throw Over - SPX/M2 Money Stock For HK, this is the most important Chart we follow and obey.
The larger TF here - Daily - perfectly illustrates how Price moves
along a trend range... Until it snaps and collapses quickly.
This is precisely what we believe will occur in the next few weeks
or perhaps sooner.
We will see a sharp reversal with 2 distinct thrusts down as primaries.
Time is running out for the Buy Side.
What took months to build will be taken out quickly.
S&P 500 / M2SL testing ATH.M2SL growth was approximately linear before the COVID dump last year. Money printing has increased since and thus it makes sense to divide the market by this increase in money production to view approximately how the market would be performing pre-COVID.
We can see that by doing so, the S&P 500 is about to retest the ATH from before the COVID dump. A rejection from this level could be disastrous for the markets.
How Central Banks Are Stealing Your MoneySince the merger between the Fed and the Treasury (kidding, kind of), I've had so many conversations with individuals outside of the financial industry who struggle to fully grasp how central banks are stealing their money. Today, I'm going to share a short and simple post which I hope will help explain the direct effect of "money printing," on the working class. Let's jump right into it.
When interest rates remain low for an extended period of time (historically), risk assets become more prone to rampant speculation (lucky for those holding assets outside of cash), leading to massive distortions in the underlying fundamentals of those assets, and historical valuation deviations from the mean (which is mathematically unsustainable). The rapidily rising prices of both assets, and goods & services, which is not being stimulated by an actual increase in the velocity of money, but rather from central banks artificially flooding the monetary system with liquidity (while interest rates are near zero), contributes to a lower standard of living for those holding cash as their primary asset.
For example:
If you have $100 in your bank account, and perhaps this is your only asset, then the central bank increases the money supply by 25%, what they've just done is increase the denominator which underpins the value of that $100.
Here's a simple logical demonstration:
100/100 = 1 (baseline purchasing power.)
100/125 = 0.80 (a 25% increase in the money supply in this example, as a result of central bank money printing, results in a 20% loss in purchasing power.)
In essence, in this hypothetical situation, you've just lost 20% of your purchasing power. With CPI in the US running at 5.4% YoY vs the Fed's 2% "target," we're currently looking at an inflation rate almost triple the Fed's goal. The US10Y yield trades at 1.25% while CPI is 5.4%, and the Fed continues to print $1.44 Trillion on an annualized basis, with no end in sight. Welcome to the wonderfully horrific world of Modern Monetary Theory (MMT). Anyone looking for a hedge?
Probably Nothing...Looks like the bond market knows something stocks don't (again). Same divergence here that we saw running up to the March 2020 crash. We're looking at SPY/M2 compared to the US10Y yield (in white). The last time the 10Y yield was in free fall, stocks continued to climb, ignoring the signal, only to crash a couple months after the divernegce began. Let's see what happens this time...
Time to have some downside protection?While I wouldn't short the S&P500, I nonetheless would be cautious if I invested in this index, as it has rarely been that expensive, once adjusted for monetary growth. The time might have come to focus on undervalued sectors (such as commodity producers) or countries (like Russia or Singapore), rather than investing passively.
Shorter-term investors might also consider long-short strategies or simple hedging, in order to reduce the downside risk.
QQQ/M2 Long Term ResistanceNext week is critical to see if we break out of this long term channel. The last several times we have reached this resistance, the reaction has been muted, but the momentum structure in particular is nost most similar to February of 2020 which warrants paying closer attention.
Liquidity - Macro PerspectivveIn additional to Wells Fargo - more than one dozen additional Banks have
reduced Lines of Credit (LOCs) - the prior contraction in Personal Credit
occurred two weeks before the previous Retracement South.
We anticipate the Net Effect will be Negative with an abrupt reduction in
M2 into the end of August.
BTC - BTC.D, DXY, M2, 2013 fractalI created this combo chart to get more overall view on how BTC is ready to continue bull run to the market top.
1) 2013 fractal had 50% dip (Nov 2013) just before the last leg up. Fractal matches this dip.
2) Bitcoin Dominance completing triangle. So now it should drop for the final BTC capitulation to altcoins.
BTC will rise in price as well.
3) Dollar Index peaked above trend line. I suspect fakeout. DXY drops, good for BTC.
4) Bitcoin adjusted for M2 money supply came back and tested the top. Classic pattern.
S&P500 Futures/M2: Breakout or Rejection?We're either seeing a breakout here on the S&P500 Futures/M2 chart, or this resistance level, which has held up since 2001, is about to spoil the bulls party. Look at the last impulse wave toward the resistance line in yellow. We're stretched, but we're seeing the same pattern, folks. Trade accordingly...
M2 Money StockWe are witnessing a Crisis on par with LTCM, similar to the Russian Bond collapse.
The Reverse Repo pool can be used in Net Effect to raise Rates.
"Net" as it has another insidious component to it - Money Markets will again come under duress as the DX moves below Par at 100 Basis.
Money Market Funds are seeing large inflows as Primary Institutions are telling Corporate Depositors to stop placing Liabilities on their Balance Sheets (Deposits are a Liability) - Interest Rates are relatively low for Money Market Accounts.
We are watching a liquidity crisis begin to unfold. Wells Fargo cutting off personal loans - banks will be in trouble beginning in August.
Loans are how Banks profit.
The moratorium of eviction and mortgage defaults is lifted on July 31st.
Defaults on loans are assured. Wells Fargo calling in all personal loans now in order to buffer the approaching defaults.
When cash in Banks is reduced - the ability for Banks to weather a series of defaults is impaired - the impairment only serves accelerates the liquidity crisis merely weeks away.
just an ideafind it interesting, this is the sum of all commodities divided by the money supply.
probably doesn't mean anything, anyway interesting.
Looking at the parabolic route of m2 and the commodities basket divided by it didn't move as expected because of it's rally the rally. lot's of money still in the markets.
give me your perspective and ideas
SPX/M2 Money Supply comparison is eye openingThis is a VERY long term outlook on the market. Shown is from pre-DotCom bubble. This is relationship of SPX to M2 money supply. There isn't a more straightforward relationship than this. People comparing the current market to the DotCom bubble are actually only halfway there in this respect. We might be disconnected from reality right now but in this figure its no where near turn of the century. So the question is if this is a exhausted breakup from the trend and it reverts or it keeps up the northern trend? Fed is continuing its QE and SPX keeps going up. How much longer can this go on?
S&P500/M2 Shows Major Resistance OverheadWe're at a major resistence level here on the S&P when M2 is taken in to consideration, going back to 2002. We're looking at S&P Futures divided by M2, and as you can see, this looks like the end of the road, folks. One thing is certain, whatever happens next for markets is going to be epic...
SPX at Critical Price LevelWe are close to historic Price Levels for the SPX/M2. If we break above this level, this will give the SPX much room to grow even further in relation to expanding M2 in the coming years.
Exciting to watch!
[UPDATE BTC] NOBODY IS TALKING ABOUT THIS BITCOIN CHART!!Let's focus on the BTC / M2 ratio.
We just hit a crazy support!!!
Ready to pump.
#Macro #economics how you need to #invest (imo)#Inflation is cool if you are close to the money printers.
I am directly attached to crypto money printers
(a form of mining)
by buying #HEX shares in the savings pool.
No need to #trade
(but you could with a small % of your stack)
S&P 500: The Big Picture IIDividing SPX by the money supply (M2) removes distortions caused by changes in the supply of money (dollars). (1) Now, suddenly the skyrocketing SPX surge following the Covid crater isn't so insane, in fact, it has yet to recover to pre-Covid levels! Dividing by M2 arguably gives a more realistic view of equities, revealing the % of money out there that people are willing to invest in equities. That's a meaningful measure of how much society values such investment.
By SPX/M2, the SPX has not overshot its post-Great Recession channel and further upward movement appears plausible within that time-tested channel. This is in contrast to the same big-picture analysis I last posted. (2) I'm not sure which is more plausible, but I'm a bit enchanted by /M2 and so am inclined to suspect this might be the better predictive model.
SPX/M2 also seems to clarify a four-year-wave cycle that corresponds conspicuously to US Presidential terms. In this model I propose a continuity of that pattern. All of course highly speculative, but with *apparent* plausibility.
(1) fred.stlouisfed.org
(2)
Silver to M2 Money Supply and the roadmap aheadLooking at the Silver to M2 Money Supply you can clearly see when the ratio bottomed and subsequently broke the preceding downtrend the silver price broke out and had significant booms.
If you take a calculated and measured move from silver's previously significant breakout and overlay to today's market you could conceivably see $60 silver by end 2023, and $200 silver by 2026.
What are your thoughts?
#gold vs #FED #M2 ... a wall of #dollars should Push #metals UPPLENTY of ROOM to the upside measure Money stock
