The Monetary Base, Buybacks and the Stock Market

Jon Alternative Media, Banking, Economy, Fiscal Policies, Market Commentary

A Useful Leading Indicator?
We often see charts comparing the S&P 500 to the growth in the Federal Reserve’s balance sheet, or more specifically, to assets held by the Fed. There is undeniably a close correlation between the two, but it has struck us as not very useful as a ‘timing device’, or an early warning device if you will.
Recently we have come across a video of a presentation by Bob Murphy, in which he uses a slightly different comparison that might prove more useful in this respect. Instead of merely looking at Fed assets, he uses the total monetary base. Here is a chart comparing the monetary base to the S&P 500 Index since 2009:

This post was published at Acting-Man on March 16, 2016.