Monthly Archives: September 2014

The U.S. Stock Market is Running Out of Monetary Rocket Fuel

On Wednesday the Federal Reserve announced it would taper its asset purchases by another $10 billion starting next month. Fed monthly asset purchases will by then have been reduced from $85 billion a month in December last year to “just” $15 billion from October, a reduction of 82.4%. This Fed taper is greatly reducing the overall monetary stimuli. The  U.S. stock market is now therefore rapidly running out of the monetary rocket fuel that contributed to its rather smooth, and ever continuing, surge since March 2009. Adding the increases in…

The Short Version of the “Austrian” True Money Supply (TMS), as of 25 August 2014

The short version of the Austrian True Money Supply for the U.S., a measure of the money supply applied in this weekly report, decreased 0.55% on last week for the week ending 25 August 2014. At $10.1824 trillion, the money supply is now up 3.07% year to date. The 1-year growth rate dropped to 7.85%, down from 8.06% reported last week. It remains lower than the 8.30% long term average since 1980. The 5-year annualised growth rate continues to fall. The current growth rate of 10.54% remains well above the long term average of…

The U.S. Stock Market Risk Indicator, August 2014

According to this stock market risk indicator, developed by combining insights from the disciplines of Value Investing and Austrian Business Cycle Theory, the risk of a future U.S. stock market decline (or the probability of poor future returns) became even bigger during the course of August. The indicator now signals the U.S. stock market has never been more risky to invest in (i.e. go long) than it is today based on data going back to 1986. The increase in risk during August was largely driven by a stock market that…