Friday, 3 October 2014

The Short Version of the "Austrian" True Money Supply (TMS), as of 22 September 2014

The short version of the Austrian True Money Supply for the U.S., the measure of the money supply applied in this weekly report, decreased 0.76% on last week for the week ending 22 September 2014. At $10.2568 trillion, the money supply is now up 3.83% year to date.

The 1-year growth rate in the money supply dropped to 7.84% for the week, down from 8.00% last week. The growth rate remains lower than the long term average and is also lower than it was at this stage last year. 

Meanwhile, the money relation for August ended in negative territory for the eight consecutive month, indicating a price deflationary environment for the U.S. economy. This is a not a good sign for the stock market.

Also, with the Fed tapering, the growth rate in Fed assets plus the money supply is now quickly declining toward the long term average after spending more than a year and a half well above it. This is also a negative sign for the U.S. stock market and could negatively affect equities in other countries and other asset classes as well. 

On Wednesday I published the U.S. stock market risk indicator for September. The indicator continues to signal near record risk that the stock market will deliver (at best) dismal returns going forward. 

In short, this is a dangerous time to be a buy and hold investor in U.S. equities, even though the stock market has shred some of its market value in recent days. 

Visit the "Austrian" True Money Supply archive here.