Welcome to the Bronco Ride!

Money supply growth is falling.  Go here: http://www.federalreserve.gov/econresdata/statisticsdata.htm The latest numbers show 13-week seasonally adjusted M2 annualized money supply growth is down to 5.7%. Non-seasonally adjusted is down to 5.8%. 4-week data averaged over 13 weeks is at 3.8% annualized. This four-week number shows the intensity of the decline in current weeks versus that of the longer term 13 week number.

Jim Grant in his Interest Rate Observer (www.grantspub.com) writes in his June 1, 2012 issue, “To judge by deeds, not words, the Bank of Bernanke is as tight as a tick. Over the past three months, Federal Reserve Bank credit has shrunk at an annual rate of 9.3%. At the peak of QE2 one year ago, Fed credit was billowing at short-term annualized rates of as much as 47%. Waiting for QE3.”

Also of note is Grant’s expectation of a QE3 to reverse the trend. Indeed, that’s the kicker here. The trend in money growth and credit is slowing (credit declining) and that’s negative for the stock market and economy, but a major reversal is likely in the not to distant future.

Welcome to the bronco ride.

Use this opportunity to pick up good companies when they go on sale.

Fear and uncertainty are the friends of value investors. However, the pain may be intense at times.

To understand wwhat a bear market FEELS like go here:http://www.youtube.com/watch?v=0OmkmeOMC6Q&feature=related

We are far from the 2008/2009 situation. Hang in there and Enjoy your weekend.

4 responses to “Welcome to the Bronco Ride!

  1. John,

    Are we trying to time central bank interventions now at CS Investing? 😉

    • Obama is on the phone to Bernanke right now. But don’t count on that–focus on Special Sits or Great companies.

      I don’t care if the world ends if I can own AMAT or EXPD or a cash gusher at a good price.

  2. I guess AMAT at 10x earnings (coarse, quick look) isn’t the good price you’re talking about?

    A lot of businesses went on sale today. I have a feeling the sellers will be marking down their inventory even more over the coming weeks!!

    Get your shopping basket ready

  3. Hi John, do you have any pdf copies of the Interest Rate Observer by any chance? Cheers.

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