Ure’s three biggest worries? Velocity at M2, the Fed decision next week, pending hernia operation. Yeah, in about that order.
Before we pull-apart this morning’s GDP report, let’s kick-it for a sec. and talk ask “What does it all mean?”
Velocity at M2 is essentially the GPD divided my M2 Money. At latest “official” calculation, it was running 1.457 times. But that was for the January number.
To keep it all in perspective, here’s what the long-term view of Velocity M2 looks like:
If you squint a bit, you can see that Velocity was higher than present even going back so far as the Great Depression.
Velocity is like “inventory turns.” In other words, if you’re WalMart-sized, you can look at how many times your inventory is replaced and have a good idea about performance of your enterprise. If WalMart replaces 100% of it’s inventory every week (they don’t) they’d be smoking! But, if there are items that have been on the shelf somewhere in a regional distro center for a year? Well, that’s not a very “good product” because things need to “turn over” and “be sold” because that’s where profit comes from. Products must turn over often enough not only to make a simple profit but to “edge out” competing products that could use that shelf and warehouse space.
A not-very-stylish pair of sandals which might “turn over” only a few times a year is far less attractive (and profitable) than choice aged beef which turns over weekly, or so. Trust you’re following?
The Nation’s money operates much the same way: The more it turns over, the greater the profit. Unfortunately, there are many things that screw with the longitudinal calculation of Velocity.
For one, the interest rates are at record long-term lows. People forget that going into the Great Depression, rates were around 6%. They fell some during the Depression but the levels we have today – and for the length of time – are unprecendented.
Good luck trying to use publicly available data to work out your own M2 Velocity. I make my own data set out of it, but I use the Quarterly GDP by BEA and the following month H.6 Money stock reported by the Fed. Thing is this never works out to the publicaly touted number.
The Q1 GDP figure (*buried because BEA like monthly percentages which shield the math from being double-checked) was 18.9103 Trillion. And the Fed M2 S.A. for April was 14.5414 which gives a Velocity calculated as 1.3004 which is a terrible number.
The good news, such as it is, is that Q4 GDP was reported as 18.76653 and the Dec 2019 Fed M2 (S.A.) was 14.3679. Which is 1.3061. Obviously, I have missed something in the “secret sauce” of how the numbers are figured!
Worse, when I went looking for the Source data, the Federal Reserve Economic Depository (FRED) told me:
Sp yes, one of my ” projects” is to find out why my calculations of M2 Velocity keep coming out in the 1.30 range while the Offishul Number is 1.4 something.
OK, on to the BEA data from today, but we can skip most of the press release save one picture (the chart) and the one number that matters, the bottom line most recent GDP from Table 3…
And, since the M2 keeps getting bigger and the GDP isn’t growing as fast, our nightmare is that M2 has headed back down again. When it goes negative, we will be in Zimbabwe Economics of MMT (modern monetary theory).
Which is crack addict economics but don’t tell the people because there are so many side-shows to distract us from clear thinking none of it matters.
If you like happy-talk? U.S. Economy Grew by 2.1% in Second Quarter.
All of which leaves us looking at present market conditions and wondering if there’s any more air that can be pumped into this old balloon. I’m thinking the answer is yes, but that’s not investment advice.
Think of it more like a reminder that there’s still time to get loose ends tied up (like my pending naval hernai surgery) and as many debts settled as you can before the economic collapse turns ugly.
You don’t really think globalists will allow the US stock market to be at such jovial levels by election day, do you? Think in terms of Trump being “Hoover’ed” and you may be closer to what’s coming methinks.
Dow futures +72’ish.
The Border Shrills Building
Typical of the headlines: “Active-duty U.S. troops are now just feet away from migrants in Texas “The troops “monitor” migrants at a Texas facility. One congressman said they shouldn’t be prison guards, and are close to breaking the posse comitatus law..”
Expect fifth column hand-wringing on this.
Thing is, this is an invasion and that is coming from foreign countries and that’s why we expect apologists for the invasion of America to keep up their shrill OMG-ness and spin this into “humanitarian” gobbledygook. If you buy it, you’re an idiot at best, traitor to the Nation at worst.
If you look at the A.P. story over here, the real question is WHY did all those people start coming here? And the answer is a well-orchestrated campaign by NGO’s to take down America. Same class of people who are turning the U.N. into a globalist (Agenda 2030, son of Agenda 21) to round up Americans and put us in cities and take us off the land. All nice and pseudo-legal . Pseudo because it’s not in the Constitution that foreign entities dictate to America but the weak-willed sissy crowd won’t hear of it. “Takes a villages to raise a child” pap. Yeah, what, to send ’em to take down America?
No, the NGO’s need to be scrutinized by the US-DoJ yesterday for their role in this invasion.
Immigration of the unchecked sort is also what BREXIT is all about at its core. Globalists trying to use immigration to hold captive entire populations. Language and bullshit is the new Weapon of Mass Destruction and you are being subjected to the though-virus version of irradiation every time you turn on shil media.
In Other News
Blah, blah, blah…
Nancy Pelosi and Alexandria Ocasio-Cortez set to meet. Can we recommend a hotel in Caracas?
McDonald’s U.S. same-store sales top forecast on new deals, revamped stores. Maybe it’s all we can afford?
As if you don’t feel like a prized pullett living in your coop yet,. the big squeeze down on free people is coming to airlines in spades as Legroom on Planes Has Been Shrinking for Years. It’s About to Get Much, Much Worse. Stack ’em like cord wood or send ’em as cargo will be along next.
Crooks of social media and the web dept. Reputation management companies are faking court orders to suppress Google results.
Vacation Notes: How National Parks Are Faring in the Age of Instagram.
OK, off to feed the runaway tomatoes… moron the morrow…