M2 MONEY SUPPLY / INFLATION Just playing around with M2 money supply chart the reason we have inflation ! We have increased M2 by 40% in the last 2 years a process which usually takes 5-6 years historically.
M2SL trade ideas
The Anatomy of a Gold Bull Market"Reversion to the mean is the iron rule of financial markets."
-John C. Bogle
The gold price has some serious catching up to do, and will likely start the next leg higher as soon as the Fed is forced to pause its rate hikes. Gold miners will outperform in this scenario...
The Anatomy of a Gold Bull MarketGold is set to outperform equities as soon as the Fed pauses rate hikes in the coming months. Now is the time to back up the truck on physical gold and the miners and enjoy a multi-year run...
Bottoming of 70s correlated to 2022Assumptions:
- Taking into account 70s
- Vertical line at the point where a recession start ( SPX500 start to retrace) and M2SL make new low
When Bottom:
- Interest rate start to decline, it's imply easy to borrow money, the stock growth quickly
- Inflation start to decline
In 2022 the market is in similar situation but not identical:
- inflation may be at peak
- Interest rate have to growth more due to prevision (strong economy and low unemployment), in the market there are to much liquidity printed in the last 2 year
- high probable the interest continue to grow, to reduce the dollar supply and inflation.
M2SL/SPX vs inflation and interest rateIndicator under study:
- M2SL (dollar supply)
- SPX500 (standard & poor 500)
- USINTR (interest rate)
- USIRYY (inflation)
Consideration on how the market could move:
- M2SL Up
- SPX500 Down
- USINTR Up
- USIRYY Up
- Inflation should be at peak
- Interest rate not at peak and the prevision tell they can double during the next month
- The Fed start to increase interest rate late respect the growth of inflation
- The Dollar supply is 27% over the trendline
Until the interest rate reach a peak it's difficult to see green candle in SPX. Because now it's more important slow down the inflation.
In history high interest rate imply bear market and recesion
M2SL/SPX500 ratio Analysis combined with M2SL and SPX500Assumptions:
- Taking into account the last 20 year of history
- Vertical line at the point where a recession start (SPX500 start to retrace) and M2SL make new low
- The last 3 cycles last almost the same (6-7 years)
Analysis:
- The trend of M2SL/SPX500 inversely proportional to the price of SPX
- M2SL/SPX500 approach a big resistance
- In the last cycles M2SL have a steady growth but in this last one we have a lot of liquidity, up-trend of interest rate. This could imply a fall of SPX
Global Liquidity (in USD), a rough measureThis black barchart is the M2 of the largest central banks of the world (USA, China, Europe, Japan.), converted into USD (in Trillions), which is the world reserve currency.
So this is a rough expression for global liquidity, which can go and buy assets like stocks or bonds.
Any strong decrease in this Liquidity should sooner or later lead to a run for US Dollars to service the huge amount of "Eurodollar" debt aka global USD-denominated debt. Leading to asset markets finding themselves up in the air like Wiley Coyote.
In comparison it shows $SPY in orange. You can see how declines in liquidity can lead to stagnations in $SPY. In 2016 though the market seems to have front-ran the acceleration of supply of liquidity...
This chart is just an analysis on liquidity as an indicator, not a prediction on what to come next from here on...
Money supply by itself is also correlated to inflationDespite M2V and GDP having better correlations to inflation, money supply itself also has a correlation to inflation.
M2 Supply Total Money Supply from February 1st 2020 to March 1st 2022
Increase of 41% of total money supply
M2 Money StockThe sharpest decline in a very long time.
Clearly, a drain is underway.
FED will release its updated balance sheet
shortly.
After a $51B Drain followed by a $4B add....
We'll see how well roll off indicated after
June 15th has been handeld.
USD Hyperinflation: Fact or Fiction?Every ten years M2 roughly doubles. Current rates of money supply creation do not appear to be unsustainable. Runaway money supply inflation can only occur if the rate of money supply creation accelerates long term, i.e. M2 forms a parabola on its log chart.
Macro Bubble Tracker v2.1v2.1 - Update broken chart due too trading view changes.
The global loosening cycle is coming starting with china and soon the Fed in the USA will drop the mirage of tightening conditions. (IMO)
Go long in select area with my personal favorite towards commodity exposed value stocks.
cDon't listen to all the pundits when they tell you the market is strong. If you had to borrow money every year to keep up your lifestyle and pay off those debts with larger debts, would you say your personal economy is strong? No. That's exactly what the government has done for decades and the chickens are coming home to roost. The SPX (S&P 500) has been phantom collapsing since August 2021 but it's hidden by the larger weighted stocks. It's possible we see a quick rally before a huge sell-off, but I wouldn't place that bet. There are good companies that are down dramatically. Even Chipotle (CMG) is down 31% in the last 6 months which is a crash! Here are some more: Clorox (CLX) down 28%, BlackRock (BLK) down 28%, Paypal (PYPL) down 69%, Penn National Gaming (PENN) down 50%, Paycom (PAYC) down 39% and so many more.
The first area to break we need to be watching is the 3,700 level. The next is the 3,500-3,250 then the where there is a possible area of large support off the old pre-pandemic highs. Our average sell-off yellow bar is 3,000 - 2,800 as a very fair level of support. That isn't to say we can't have a 50% collapse or more, but this is a great starting point to average out and see where this may end. If we see banks folding, WW3, or anything along those lines, expect massive moves to the downside and then incredible inflation (FED money supply growth).
The TRUTH About Deficits, Bonds, PRINTING & More...A brief explanation on why everybody is and always has been so wrong about the deficit, printing and much more...
Hyperinflation coming by 2030 in the US. Can it be true? Who does it benefit? Check out the M2 money supply vs the S&P 500. Clearly, the more that is printed the more assets increase. Owning assets is your best bet of financial survival. The poor will be crushed but being wealthy in that time is not pretty either. This has been talked about for years by people like Robert Kiyosaki, Peter Schiff, Mike Maloney, and so many more. Milton Friedmans Free To Choose on YT has a great explanation about inflation I recommend everyone look at. This chart is monthly and if we are truly looking at a long-term time horizon, it looks clear this trend is not changing. Usually, these don't change until it implodes on a government.
Be watching commodities over the next decade if you are a long-term player. I will be stacking those chips along with crypto in the Defi world and other dividend-paying stocks with cash flow real estate as a backup. This market we are heading into is going to test everyone's asset allocations to the extreme.
#crash #inflation #depression #marketcollapse # hyperinflation
Dashboard of key Fed balance sheet and money supply/velocityThe parabolic ascents seem to end in a couple cases around spring 2023 (April) if the parabolas are correct and hold up. This is all based on the magic of compounding (debt). At some point the debt bubble gets too big and pops.
Bitcoin Supply Inflation VS M2 Money Supply InflationOver the last few months, inflation has been a hot topic.
As a result, I thought it would be great to emphasise the most important aspect of Bitcoin's monetary policy: scarcity.
For the first time ever, we can precisely see the maximum supply of a asset than can perform as our global reserve currency.
Given the halving event that occurs every four years (210,000 blocks), the inflation rate of Bitcoin's supply is steadily approaching zero. This is evidently shown via Glassnode''s data for Bitcoin Supply GLASSNODE:BTC_SUPPLY . After the third halving event, Bitcoin's inflation rate was approximately 1.8%
In recent years, Bitcoin has a lower inflation rate when compared to the current inflation rate of the M2 money stock.
Over the long term, this is extremely bullish.
We can expect more capital to be injected into Bitcoin and the rest of the cryptocurrency market as adoption continues.
Trader Dončić
M2 - Monetary PolicyFurther Expansion is ahead.
Price Instability.
A Macro Environment unseen in Centuries.
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Longer-Term the Trend is clear, M2 never recedes
it only expands.
Timing the next move in Equities... will be tied to
later moves far higher.
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Probability - 100%
The Dow has Extensions to 62,200.
Something to Consider
Growth Cycle Analysis of USD Supply.This is not entirely about a trade, moreso a thought experiment of the future to come.
After the great 2020 coof liquidity crisis a brief and severe expansion of the monetary supply occurred in order to bail out the entire economy. This seems to be followed by an equivalent expansion rate mirrored by the 1971 expansion. The marked difference this time is that the interest rate is 0. To reign this in would require negative rates, or capital controls, AND a major collapse (which I do not think will be permitted).
