A Warning?
The St. Louis Adjusted Monetary Base AMB) may be sounding a warning for the US Indices.
What’s the AMB? The funds US banks have deposited with the Federal Reserve. Funds deposited with the FED mean funds taken away from Main Street. I believe the main reason why you haven’t seen inflation in the US is because Main Street has not been lending. Once the deposits from the FED move to Main Street, then you’ll see rates rise.
One other effect: generally when AMB funs leave the FED, three to six months later, US indices drop.
Let’s have a look at a few charts.
In the chart above we see the acceleration of funds deposited with the FED once QE started.
The next chart shows the times the AMB dropped. That chart is followed by one of the Dow. Note that except for the area in green, the Dow has dropped in line with expectations.
Finally, the current position of the AMB.
The question is whether there has been a breakdown. Only time will tell. I’ll certainly be keeping an eye on the data. It’s released fortnightly.
The post A Warning? appeared first on Ray Barros’ Blog for Trading Success.
Source: http://www.tradingsuccess.com/blog/a-warning-6659.html
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