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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 463527  
Subject: Control Panel: The rising tide of money Date: 12/23/2012 1:45 PM
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The Control Panel is basically the same as the past few weeks.

The S&P 500 approached but did not surpass its previous high, 1467 on 9/14/12, which was 66 trading days ago. Stock sentiment indicators (VIX, % of stocks above 200D MA, New Highs-New Lows, Advance-Decline) hiccuped slightly but were within their normal channels. Failure of fiscal cliff talks before the Christmas break caused a slight disturbance, but we have all suffered through government negotiations before and the attitude seems to be "wake me when it's over."

The "Fear and Greed" index has moved slightly into "Greed" from "Neutral." The "mungofitch lagged S&P 500" continued to rise and it near its previous 2012 maximum.

The S&P 500 P/E Ratio is very close to its long-term average. This is based on historically-high Corporate Profits After Tax, which is still skyrocketing. Should Corporate Profits After Tax revert to the mean during the next recession, stock prices will be very overpriced...but not just now.

The international stock markets rose. The Nikkei skyrocketed in a bubble-like pattern. All the Asian markets jumped.

The USD, Canadian and Aussie dollars fell. The Euro and Swiss Franc rose.

Financial stress is low and falling. Financial conditions (including the shadow banking market) is very loose. Treasury yields remained in their channels.

In the real economy, Manufacturers' New Orders jumped in October.


November 2012 Manufacturing ISM Report On Business®
PMI at 49.5%

Economic activity in the manufacturing sector contracted in November following two months of modest expansion, while the overall economy grew for the 42nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®....

"The PMI™ registered 49.5 percent, a decrease of 2.2 percentage points from October's reading of 51.7 percent, indicating contraction in manufacturing for the fourth time in the last six months. This month's PMI™ reading reflects the lowest level since July 2009 when the PMI™ registered 49.2 percent. The New Orders Index registered 50.3 percent, a decrease of 3.9 percentage points from October, indicating growth in new orders for the third consecutive month. The Production Index registered 53.7 percent, an increase of 1.3 percentage points, indicating growth in production for the second consecutive month. The Employment Index registered 48.4 percent, a decrease of 3.7 percentage points, which is the index's lowest reading since September 2009 when the Employment Index registered 47.8 percent....

"The NMI™ [Non-Manufacturing Index] registered 54.7 percent in November, 0.5 percentage point higher than the 54.2 percent registered in October. This indicates continued growth at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 61.2 percent, which is 5.8 percentage points higher than the 55.4 percent reported in October, reflecting growth for the 40th consecutive month.
[end quote]

The price of gold continued to fall. The price of gold has been steady in a broad channel between about $1525 - $1800 since its high at $1925 in 2011.

M3 is growing very rapidly, in real time and especially YOY. YOY change is 5%, well above the GDP growth rate.

MZM, the big boyz money supply, is skyrocketing.

       
Date $Billions Annualized growth
09/03/12 11147.5
09/10/12 11178.9 15%
09/17/12 11,205.10 12%
09/24/12 11215.1 5%
10/01/12 11,303.50 41%
10/08/12 11275.2 -13%
10/15/12 11,287.50 6%
10/22/12 11302.5 7%
10/29/12 11,339.60 17%
11/05/12 11367.9 13%
11/12/12 11363.4 -2%
11/19/12 11332.9 -14%
11/26/12 11351.4 8%
12/03/12 11401 23%
12/10/12 11467.7 30%


M2, the broad household money supply, is also jumping.




M2
Date $Billions Annualized growth
09/03/12 10073.4
09/10/12 10107.5 18%
09/17/12 10121.3 7%
09/24/12 10121.1 0%
10/01/12 10194.8 38%
10/08/12 10182 -7%
10/15/12 10210.8 15%
10/22/12 10211.8 1%
10/29/12 10255.6 22%
11/05/12 10293.3 19%
11/12/12 10269.6 -12%
11/19/12 10250.3 -10%
11/26/12 10264 7%
12/03/12 10300.7 19%
12/10/12 10355.5 28%


This rapid growth in household money would be inflationary if the velocity was not at a post- World War 2 low. That is, households and businesses are banking much of the Fed-pumped excess money rather than spending it, as I discussed in a post earlier this week.

Real Personal Consumption Expenditures are growing. This is the source of economic growth and can continue in a non-inflationary path if demand does not outstrip supply.

This tsunami of money is supporting growth in the stock market and keeping the bond bubble inflated. The Fed is aware that a rising stock market supports consumer and business confidence so they are determined to keep it rising.

The rising tide of money parallels the rising tide of Federal Reserve and government debt.

Assets - Securities Held Outright by the Federal Reserve is growing rapidly again and is now $2.67 Trillion (17% of GDP, which is $15.8 Trillion). This is monetary stimulus.

Federal Debt: Total Public Debt is $16.0 Trillion (100% of GDP) and growing rapidly. Net Government Saving (this quarter's Federal deficit) is -$1.23 Trillion (a deficit of 7.8% of GDP). This is fiscal stimulus.

Whatever your feelings about the Federal Reserve and government economic interventions, it is clear that the U.S. economy and financial asset markets are as hooked on fiscal and monetary stimulus as a methamphetamine addict.

Our pushers are enthusiastically aware of that fact and have no intention of pushing the addict into tweaking (a mild recession), much less full-blown withdrawal (which would make The Great Depression look like a walk in the park).

Meanwhile, the tide is rising, so Merry Christmas to all METARs who celebrate and joyous solstice and return of the sun to all northern hemisphere METARs! Check out the analemma and take heart :-).

http://en.wikipedia.org/wiki/Analemma

The rising tide of money accompanies the lengthening days. Let's enjoy the feeling and ignore the "fiscal cliff" during the holidays.

Wendy



http://stockcharts.com/freecharts/candleglance.html?$INDU,$S...

http://stockcharts.com/freecharts/candleglance.html?$IRX,$US...

http://money.cnn.com/data/fear-and-greed/

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&m...

http://stockcharts.com/freecharts/candleglance.html?$STOX5E,...

http://stockcharts.com/freecharts/candleglance.html?$HSI,$ST...

http://stockcharts.com/freecharts/candleglance.html?$USD,$XA...

http://www.multpl.com/
http://research.stlouisfed.org/fred2/series/CP

http://research.stlouisfed.org/fred2/series/STLFSI
http://research.stlouisfed.org/fred2/series/NFCI

http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942
http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=1294...

http://www.nowandfutures.com/articles/20060426M3b,_repos_&am...

http://research.stlouisfed.org/fred2/series/MZM
http://research.stlouisfed.org/fred2/series/M2

http://research.stlouisfed.org/fred2/series/M2V
http://research.stlouisfed.org/fred2/series/PMSAVE
http://research.stlouisfed.org/fred2/series/PCECC96

http://research.stlouisfed.org/fred2/series/WSHOL
http://research.stlouisfed.org/fred2/series/GDP
http://research.stlouisfed.org/fred2/series/GFDEBTN
http://research.stlouisfed.org/fred2/series/TGDEF
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