Thursday, October 1, 2009

October Monetary Trends…

The first edition of October’s monetary trends is out. If you spend some time going through the charts, I think you’ll find that the underlying credit situation is still deteriorating. You have time deposits and retail money market funds down tremendously, money aggregates are decreasing, velocity is still decreasing, commercial paper and consumer credit are falling at a faster rate, inflation readings while bouncing a little are still negative, and the S&P 500 Price to Earnings ratio is continuing its historic disconnect from reality:



Look at the amount that commercial paper is down year over year! We’re talking nearly 40%, and the fuel for the largest segment of the economy, consumer credit, is continuing to plunge into negative territory:



Total loans and leases negative with no upturn:



All monetary aggregates when measured in year over year percent change are up, but the annualized RATE percent change is showing that in the short term the aggregates are SHRINKING:



Velocity continues to fall, with the monetary base velocity growth plunging to the -80% range year over year:



In terms of market valuations, THE MARKET HAS NEVER BEEN AS OVERVALUED AS IT IS RIGHT NOW – NEVER.



The geniuses on Wall Street will argue forward P/E, but even with their wild eyed, mark to fantasy bullshit, the FORWARD P/E IF ACHIEVED (it won’t be) is still in the out of control, way outside of historic norms 38 range. This is a MASSIVE DIVERGENCE from reality, do not expect it to last.

Rare Earth – Get Ready: