Stocks - Seasonal Performance II

[flow5]

With nothing else for the PDs to buy - the blow-off in stocks is accelerating & the flash-crash post-poned.

[flow5]

Prediction: economists are going to stop reading old text books & start reading the market. No more black swans. 


 

I commented on 12-16-12, 01:50 PM #1 flow5<?
Posts:203 Re: Q3 =

"We’re close to seeing the real power of OMOs. R-gDp is likely to accelerate earlier & faster than anyone now expects. The roc in M*Vt before any new stimulus is already above average. With low inflation (given some deficit resolution), Jan-Apr could be a zinger"

The Fed doesn't know a bank (which creates new money whenever it makes loans or invests), from a non-bank (the turnover of existing money), i.e., doesn't know money from liquid assets (Keynesian confusion).

Expanded FDIC insurance coverage induced dis-intermediation within the non-banks (resulting in a de facto tightening of FOMC money policy). What caused M1 money growth to surge was that customers transferred their balances between deposit classifications - from savings/investment type accounts (interest-bearing without reserve requirements), to transactions based accounts (non-interest-bearing with reserve requirements).

M1’s growth rate simply represented both an indifference on the part of depositors/savers given historically low yielding assets, & a preference for reduced risk (saver/holders received 100% unlimited FDIC insurance in the deposit classifications where they moved their money).

Stocks current moves are PROOF:

Scaling back coverage will partially reverse prior trends. Prior reductions in RETAIL sweeps to MMDAs, & reductions in COMMERCIAL sweeps to money market instruments (T-Bills, Euro-Dollars, & institutional MMMFs), will also contribute to a higher future velocity of money & collateral.

The precise effect is hard to measure as contrary forces were at work. I.e., Operation Twist ended Dec 31st 2012 having re-infused short-dated "safe-assets" into the money market (facilitating shadow-bank lending or money velocity).

But savings that were formally impounded within the CB system will again be released & flow back through the intermediaries (intermediaries between savers & borrowers), where they are "put to work" (matching savings with investment). I.e., savings held within the CB system are "lost to investment" resulting in a leakage in National Income Accounting. Contrary to all economists, CBs do not loan out existing deposits, saved or otherwise.

As savings flow back thru the intermediaries it will boost the markets/increase real-gDp. It should also re-balance the EUR/USD exchange rate (as currencies will be converted), because it will stimulate growth in the unregulated, prudential reserve, money creating, Euro-dollar banking system.

[flow5]

"The Federal Reserve Plans To Identify “Key Bloggers” And Monitor Billions Of Conversations About The Fed On Facebook, Twitter, Forums And Blogs"

Big brother is not watching you, big brother (the Fed) is watching & censoring their own research staff.

[flow5]

This is a ZINGER.

[flow5]

Jan 28, 2013 M1 money stock figure @ $2,522.6 T.  The remuneration rate must be raised immediately in order to stop this train wreck. Money growth is too fast.

[flow5]

If your a trader you should now be short until Feb month-end (on a seasonally adjusted basis).  The seasonal peak is usually in the last week of Feb.  Draw a line under the trend & sell if it breaks it.  But if we don't get a break by the end of the month then reverse direction & buy. The technical Granville Letter is good - special $31.00 for 4 issues.

         Long-term roc's in MVt peak this month (so should commodity prices).

Yahoo.com finance has good graphs:

yhoo.it/12RizJA

[bimetalaupt]

Feb 8, 2013 13:42:23 GMT -5 flow5 said:

Jan 28, 2013 M1 money stock figure @ $2,522.6 T.  The remuneration rate must be raised immediately in order to stop this train wreck. Money growth is too fast.

Flow5 ... I see where the week average for m2 HAS DROPPED from 12/31/2012 of 10558.2
to one week of 1/28/2013 to 10334.7 ( end of month to end of month)...

2522.6 ( WEEK AVERAGE- NOT MALADJUSTED- THANK-YOU) FOR week of Jan 28,2013 was also down from 2659.5 for the week of 12/31/2012.  The Adjustment by the Federal Reserve paint a picture
of more internal power with money supply then the 2005 model from San Francisco Federal Reserve basted in VAR math that has not painted the true picture of the recovery.

Target M1 Growth = Target GDP Growth + Target Inflation...

The current M1 growth for one year ( all thing being equal for one year in MALADJUSTMENT)  Was 11.9% or six months was 13.5%...

My point in all of this .. Now the Banking system has a recovery path but BISIII has such a large hold on the future of banking  so M1 has little to do with MVt? Or what did I miss.

Bank will be required to double capital (Tear1) to about 12.5% (first Report).. PHASE DELAY HAS BEEN INCREASED FROM 2005 BY SOME LARGE AMOUNT..M3 DELAY IS NOW LOOKING AT 18 MONTHS....
DO YOU THINK THE BANKING SYSTEM IN THE USA IS BETTER THEN THE EU AND ARE THINGS NOW WELL ENOUGH ALONG FOR THE TRUE RECOVERY TO REFLECT THE 7.5% INCREASE IN M3!!

Thank-you for your answer-Sir,
BiMetalAuPt 

[flow5]

See: research.stlouisfed.org/publications/es/12/ES_2012-02-03.pdf

Quantitative Easing and Money Growth:
Potential for Higher Inflation?
Daniel L. Thornton

See: www.frbservices.org/files/regulations/pdf/rmm.pdf

Reserve Maintenance Manual

See: research.stlouisfed.org/msi/

Anderson's MSI spendable balance concept

---------------------------

The drop in M2 is seasonal (principally related to the drop in total checkable deposits).  Total transactions based accounts represent the economic driver.  Legal reserves represent the base.  The multiplier equals total checkable deposits divided by the base (required reserves). 

The Fed simply accommodates the seasonal demand for money & loan-funds:

"In the original federal reserve act of 1913 "It was anticipated that credit extended by the Federal Reserve Banks to commercial banks would rise & fall with seasonal & longer term variations in business activity"

And: "From the beginning, the Federal Reserve was reasonably successful in accommodating the seasonal swings in the demand for currency—in the terminology of the act, providing for “an elastic currency”."

The FOMC is tasked to provide yearly seasonal adjustments as business activity waxes (the FRBNY's "trading desk" injects reserves) & wanes (mops them up). And the problem is the FOMC doesn't recognize that the theory & mechanics are the same for seasonal mal-adjustments & the "real Bills" arguments.

Member Commercial Bank Legal Reserves (some notes)

Reserve Computation Period….(current period days)

14 Days – 2 weeks -- Begins on Tuesday -- Ends on second 2^nd Monday

(1) daily average vault cash held during the computation period that ended 3 days prior to the beginning of the maintenance period

(2) applied vault cash is deducted from the amount of the institution's required reserves

(3) balances due from other banks do not include: -- balances due from Federal Reserve banks;

(4) pass through accounts (respondent banks) or from banks located outside the U.S.

(5) cash in the process of collection and due from other banks may be excluded from deposit and Eurocurrency liabilities

(6) computed on the daily average of deposits subject to reserve requirements

==================================================================

Reserve Maintenance Cycle    (lagged period days)   required Reserves

30 days after the beginning of the computation period

14 Days – 2 weeks period in which to maintain and settle required reserves 
begins on Thursday -- Ends on second Wednesday

Required Reserves

Reservable Liabilities = Pass-thru-s + Vault Cash + IBDDs (inter-District bank demand deposits)

The 14 days ending --(17 days before the start) of the maintenance cycle.

I.e., Weekly reporting CBs maintain reserves on current Liabilities with a 30 day lag.

Computation…………..lag ………………...maintenance

14 days<--------------17 days------------14 days

Maintenance begins 31 days after beginning of computation period.

Reserve Maintenance Cycle (lagged period days)
required Reserves 30 days after the beginning of the computation period
14 Days – 2 weeks Begins on Thursday Ends on second Wednesday

The seasonal demand for money must be reserved 30 days hence.  So reserves lag total checkable deposits. 

The roc in total checkable deposits is your trading yardstick.

[flow5]

The President of the FRB-NY's WILLIAM C. DUDLEY stated: “For this dynamic to work correctly, the Federal Reserve needs to set an IOER rate consistent with the amount of required reserves, money supply & credit [Reserve & commercial bank] outstanding”

[flow5]

See: research.stlouisfed.org/publications/es/12/ES_2012-02-03.pdf

Quantitative Easing and Money Growth:
Potential for Higher Inflation?
Daniel L. Thornton

Note: You have to back date required reserves to sync the data points up to transaction accounts by 30 days.

See: www.frbservices.org/files/regulations/pdf/rmm.pdf

Reserve Maintenance Manual

---------------------------

The drop in M2 is seasonal (principally related to the drop in total checkable deposits).  Total transactions based accounts represent the economic driver.  Legal reserves represent the base.  The multiplier equals total checkable deposits divided by the base (required reserves). 

The Fed simply accommodates the seasonal demand for money & loan-funds:

"In the original federal reserve act of 1913 "It was anticipated that credit extended by the Federal Reserve Banks to commercial banks would rise & fall with seasonal & longer term variations in business activity"

And: "From the beginning, the Federal Reserve was reasonably successful in accommodating the seasonal swings in the demand for currency—in the terminology of the act, providing for “an elastic currency”."

The FOMC is tasked to provide yearly seasonal adjustments as business activity waxes (the FRBNY's "trading desk" injects reserves) & wanes (mops them up). And the problem is the FOMC doesn't recognize that the theory & mechanics are the same for seasonal mal-adjustments & the "real Bills" arguments.

---------
The seasonal demand for money must be reserved 30 days hence.  So reserves lag total checkable deposits. 

The roc in total checkable deposits is your trading yardstick.

[flow5]

can't get my comments to post

[bimetalaupt]

Flow5,
 The 50/50 system has been rocking today.  Bonds are up and Stocks world wide have soften.  Looks like the Equity Risk Premium  will again shortly reach the golden moment and hurtle of 6% for the market beta of 1.00000.  The we will use the cash to buy.  Do you see 10 year bonds ability to reach 1.5% or less?? Current low beta system has a beta of 0.64.
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average beta

0.64087

Just a thought,
BiMetalAuPt

Math used the zero growth assumption.. conservative
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return low beta	5.2741%
10Y T-Note	1.89000%
ERP	3.38413%
erp beta 1	5.28049%
market	7.17049%

[bimetalaupt]

Flow5,
 The fill on close out of balance cost the DJIA 150 points starting about one hours before close.  HD was esp on the sell list...

This is what is killing the Mom and Pop investor as all mutual funds quote value one time a day.. at the close!!!Wall street does everything to destroy them and now has almost no one to sell to except themselves.. And this is at zero cost with the average holding period in seconds.. Dark Pools rule...The average broker is now very much broker then in 1999!!!

Just a thought,
BiMetalAuPt..

CC to SFW

[flow5]

bimetalaupt

My answers/posts are disappearing.