Playing around with the indexes I found a very high correlation
between M2 (US money supply year over year index) and ECRI. M2
seems to be a good leading indicator for ECRI.
Growing M2 may also be a good reason for the stock market to go
up - its still plenty of cheap money out there
Posted by angelo851 on 13th of Nov 2011 at 07:11 pm
...So since M2 is still growing, and is inflationary and
initially good for the stockmarket, do you think that the ECRI will
reverse and their prediction of a new recession will be proven
wrong? I'm not sure which is the lading indicator, M2 or the
ECRI?
Just looking at the graph M2 is leading ECRI. My personal view,
for what its worth, is that growth will slow below 0 again during
Q1 and/or Q2 and we will have a QE3. With the high volatility in
the ECRI-index, ECRI can always say that they have been right,
whatever the outcome will be. It's a black box.
Posted by angelo851 on 14th of Nov 2011 at 07:31 am
Yes, it is a tough call. I have seen ECRI's representative go on
CNBC and he says that ECRI always calls recessions many months in
advance of the market realization of recessions. If their black box
is that good then maybe the M2 will start dropping if the
economy heads into recession. Please keep those charts up and
keep posting them, if you can. Maybe once a month would be
adequate. Thanks.
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one more for the road
ECRI still bearish
Posted by lebow on 13th of Nov 2011 at 10:24 am
Playing around with the indexes I found a very high correlation between M2 (US money supply year over year index) and ECRI. M2 seems to be a good leading indicator for ECRI.
Growing M2 may also be a good reason for the stock market to go up - its still plenty of cheap money out there
...So since M2 is still
Posted by angelo851 on 13th of Nov 2011 at 07:11 pm
...So since M2 is still growing, and is inflationary and initially good for the stockmarket, do you think that the ECRI will reverse and their prediction of a new recession will be proven wrong? I'm not sure which is the lading indicator, M2 or the ECRI?
tough call
Posted by lebow on 14th of Nov 2011 at 12:29 am
Just looking at the graph M2 is leading ECRI. My personal view, for what its worth, is that growth will slow below 0 again during Q1 and/or Q2 and we will have a QE3. With the high volatility in the ECRI-index, ECRI can always say that they have been right, whatever the outcome will be. It's a black box.
Yes, it is a tough
Posted by angelo851 on 14th of Nov 2011 at 07:31 am
Yes, it is a tough call. I have seen ECRI's representative go on CNBC and he says that ECRI always calls recessions many months in advance of the market realization of recessions. If their black box is that good then maybe the M2 will start dropping if the economy heads into recession. Please keep those charts up and keep posting them, if you can. Maybe once a month would be adequate. Thanks.