{"id":2992,"date":"2010-05-05T16:25:26","date_gmt":"2010-05-05T16:25:26","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2992"},"modified":"2025-03-27T15:49:02","modified_gmt":"2025-03-27T15:49:02","slug":"global-money-sufficient-for-recovery-but-no-excess-for-markets","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2992","title":{"rendered":"Global money sufficient for recovery but no &#8220;excess&#8221; for markets"},"content":{"rendered":"<p>A <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2010\/4\/1\/global-economic-recovery-on-track-but-monetary-tightening-ap.html\">post<\/a> in late March argued that the global monetary backdrop remained consistent with a solid economic recovery but no longer supported further market gains. The escalation of the Eurozone sovereign debt crisis and the recent set-back in equities may be symptoms of deficient liquidity.<\/p>\n<p>One reason for caution was a fall in G7 annual real M1 expansion below industrial output growth &ndash; equities have tended to underperform cash following such cross-overs. The US Federal Reserve, meanwhile, has engaged in <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2010\/4\/16\/equities-at-risk-from-fed-stealth-tightening.html\">&#8220;stealth&#8221;<\/a> tightening since February, using Treasury bill sales to drain $174 billion from banks&#8217; reserve accounts. The Fed may partly reverse this withdrawal if markets continue to deteriorate.<\/p>\n<p>The latest monetary statistics confirm the earlier assessment. The charts show six-month growth rates of G7 and E7 output and real M1. G7 real M1 expansion appears to be stabilising following a slowdown while E7 real M1 continues to boom. Combined growth looks consistent with an ongoing economic recovery.<\/p>\n<p>Six-month G7 real M1 expansion, however, remains below industrial growth, suggesting insufficient liquidity to push markets higher. This relationship bears monitoring &ndash; output momentum is moderating and central bank responses to current turbulence could cause real M1 to reaccelerate. A positive cross-over of annual growth rates, however, is unlikely until late summer at the earliest.<br \/><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/g7-ind-out060510.gif?__SQUARESPACE_CACHEVERSION=1273133283799\" alt=\"\" \/><\/span><\/span><br \/><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/e7-ind-out060510.gif?__SQUARESPACE_CACHEVERSION=1273133297158\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A post in late March argued that the global monetary backdrop remained consistent with a solid economic recovery but no longer supported further market gains. The escalation of the Eurozone sovereign debt crisis and the recent set-back in equities may be symptoms of deficient liquidity. One reason for caution was a fall in G7 annual [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2992","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2992"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2992\/revisions"}],"predecessor-version":[{"id":5301,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2992\/revisions\/5301"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}