Don’t Look Now, But the Fed is Dialing Back Money

Oh, they don’t come out and say they are dialing it back now.  But sometimes, facts speak louder the words.

We flipped to the weekly Fed. H.6 Money Stocks report, updated last night, and see that in the three month window ending June 30, the annual rate of M1 (cash and demand deposits) was going up an 11.4% annualized.

But lo, and behold, brothers and sisters, the most recent data shows that for the three month window ending August 14th, the M1 money rate increase had been dialed back to 9.3% annualized.

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Which means that the Fed is starting to ‘chill-down’ the markets a bit.  Plus, on an annual basis, the through June 30 data showed an annual increase of 8.7% at M1 while the sliding window to August 14 hgad dropped to 8.0% annualized.

Monetary addictions are very much like drug problems.  They both can disconnect victims of their sense of Reality.  When anyone calls them out on it, they immediately go into denial (especially clear if you go back and look at former Congressman Ron Paul trying to get straight answers from the eel-slippery Fedsters).

And then, to make it all worse, the actual withdrawal from the addiction can be Depression, or worse. James Brown talked about it in King Heroin – something the mainstream audience may have missed.

But in economic terms, the “withdrawal” from easy money can result in wars, or in Weimar Germany, debased money paved the way to Hitler’s rise to power.

The trading today could be pivotal, since there is a technical remaining for one more bump into next week before the next drop on the roller-coaster.

To a degree, what happens may depend on the dynamics of this weekend.

Musically?  We flip over to?

Harvey Danger

No, not Flagpole Sitta (video 1977), but the phrase “I’m not sick, but I’m not well” does appropriately fit a broad spectrum of politics, economics, and sociology these days…

Back to point (while I’m rocking out) is that if Harvey (the hurricane, not the group) does a LOT of damage, it could result in an economic boost in the longer term.  Short term, we might see the market going down – due to Fed policy and the insurance giants sloughing off some equities to get liquid to cover disaster checks.  But in the end, disaster IS something a growth-oriented economic engine handles with remarkable ease.

Meantime, the storm reality looks like this:

As you can see, we’re well out of harm’s way, but no telling where Harvey will go.

Meantime though, we applaud the work of Nannan Luo [2012] who looked at markets after the Fukushima quake and noted…

“Consistent with the literature, this paper finds that a negative shock brought by this catastrophic natural disaster exists in all of the six stock markets. But this impact is surprisingly small. Under the statistic t-test, the shock on all of the six stock markets is statistically insignificant. “

And that leaves us with the money supply, and looking for Wyoming miracles as much as anything,  to define market dynamics in coming weeks.

Lifestyles of the Rich & Feudalists

Yes sir, the rich and famous are up in Wyoming this weekend.

The reports that Fed Chair Yellen [is] set to deliver what could be historic speech in Jackson Hole maybe overstates things.

Having told you the Fed has started to dial-back M1, we can assume they will be taking a few lines of cash off the mirror and will be trying to force/arb up interest rates…but we shall see.  The reality is the 10-year is stuck at 2.2% – so which part of periodic longwave economic interest rate decline and ensuing destruction of debt and savings don’t they understand?

Reuters seems to be more dialed into the protocol of it all with “Futures higher as investors await Yellen’s speech.”  It’s rare the market’s don’t rally when Fed chiefs speak.  It’s the hangover, you watch for.

(We’re against mightily disappointed that our invite to show up and quietly watch the Jackson Hole meet-up has, for the 17th year running, been misplaced…thanks for letting me whine.)

Big Hit on Durable Goods Just Reported

So here’s the press release on that score:

“New Orders New orders for manufactured durable goods in July decreased $16.7 billion or 6.8 percent to $229.2 billion, the U.S. Census Bureau announced today. This decrease, down three of the last four months, followed a 6.4 percent June increase. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders decreased 7.8 percent. Transportation equipment, also down three of the last four months, drove the decrease, $17.4 billion or 19.0 percent to $74.3 billion.

Shipments Shipments of manufactured durable goods in July, up three consecutive months, increased $1.0 billion or 0.4 percent to $237.4 billion. This followed a virtually unchanged June increase. Transportation equipment, up two of the last three months, led the increase, $0.4 billion or 0.5 percent to $79.2 billion.

Unfilled Orders Unfilled orders for manufactured durable goods in July, down two of the last three months, decreased $3.8 billion or 0.3 percent to $1,131.8 billion. This followed a 1.3 percent June increase. Transportation equipment, also down two of the last three months, drove the decrease, $4.8 billion or 0.6 percent to $772.2 billion.

That my friend is the poster child for “sucks.”  The market, too stupid to see the obvious and maybe buzzed by the upward revision for the previous month, is still up 45.  ViseGrips anyone?

Class Actions

This could cost someone: Aetna envelopes reveal customers’ HIV status.

Meantime, the University of Texas has been sued over the removal of Confederate statues.  Historical revisionism?

Northwest Passage

See where a Russian Tanker Completes Arctic Passage Without Aid of Icebreakers.  Was Al Gore aboard?

Amazon Showdown Footwork

Here comes another shuffle as the Trump/Real Estate world eyes the online empire of Jeff Bezos/Amazon:  Amazon to cut prices on Whole Foods staples like eggs, beef.

Bricks versus clicks in the courts – to come one of these days.

Unless Janet can report something really good at Jackson Hole we expect an upward opening, but sobriety to return ahead of the close… Ho9w sober will be covered on the site tomorrow.

5 thoughts on “Don’t Look Now, But the Fed is Dialing Back Money”

  1. I still think we need the 5-10% drawback (shock! horror!) before we get the whatever-it-takes save (rate-cut, QE4), only then will we get our blow off top.

  2. “in Weimar Germany, debased money paved the way to Hitler’s rise to power”

    You know Congress already passed legislation that would allow that very situation.
    I had at times wondered if all these horrific events taking place like the recent one over a historical monument.. were planned as a precursers to just such an event.
    What surprise’s me is if the way I read it is right.. that would eliminate their position of control.
    I find that ironic to..

    • Also allow for the takeover of all facets of the industrial complex of the United States and allow seizure to any goods services or wealth..
      Everyone selling out to those that wish to over that’s irony at its finest.. the other direction just chewier.. ten million dollar loaves of bread a months wages for a few scraps.. with the only option is a reboot.. doing away with all services and starting fresh.
      Of course that’s just what it looks like to me as I peek out of the box. And wonder how stupid. What everyone See’s as important has no importance at all.. when all this time everyone should have been trying to strengthen the base not weaken it for greed..
      All that’s my opinion..who knows I might be totally off track..

      • Unfortunately.. I’m a debtor.. as a bottom feeder I know first hand the pitfalls. Inflation up four wages two. Necessary services up six to ten eight on average. Your only option is to juggle trying to maintain quality of life without having to give in and join the masses that are forced to ask for public assistance.
        The days where employers looked out for their employees best interests are long gone in place employers have gone back to the mindset of the employers before social security was put in place.. it’s a catch-22.. damned if you do damned if you don’t..

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