Simon Ward - Money Moves Markets - Comments

Simon Ward comments on Eurozone credit crunch eased by ECB lending boost

Simon Ward — Fri, 10 Feb 2012 17:32:25 +0000

Thanks Rob - interesting question. The ECB lending survey started in 2003 so there is insufficient history for a comparison. However, the equivalent US survey goes back to 1967 (with a break of a few years in the 1980s). The US data suggest that 1) the credit tightening balance is a good leading indicator, 2) real narrow money is slightly more reliable and sometimes exhibits a longer lead and 3) recessions are normally signalled by the tightening balance moving well above +30%. On this basis, the Eurozone current balance is in recessionary territory but the future one isn't - consistent, perhaps, with a mild downturn, which is also suggested by the real M1 data.

Rob Perry comments on Eurozone credit crunch eased by ECB lending boost

Rob Perry — Thu, 09 Feb 2012 15:10:59 +0000

Hi Simon,

Continue to enjoy the blog! A question for you. Out of real narrow money and the lending survey (or components of), which has the longer lead on real activity, and are the correlations of a similar standard? Thanks!

Bob comments on UK inflation: stubborn "core" pressures at odds with consensus optimism

Bob — Wed, 18 Jan 2012 21:21:19 +0000

Why the BOE forecast keeps being accepted I do not know. I can only assume it suits the bankers to pass this on to their clients as it helps obscure the fact that many investments are delivering below-inflation returns.

In 20 years or so I can foresee Dr King telling us that he had to sacrifice his personal integrity and constantly predict lower inflation than was likely in order to keep the bond markets happy, for the country.

When the BOE is buying government bonds at below inflation returns with printed money then of course this will stoke more inflation, it is putting more money in than it is taking out with the excess finding its way into government spending and thus into the pockets of government workers, pensioners etc.

Cam comments on More evidence of global lift

Cam — Thu, 05 Jan 2012 13:44:09 +0000

Question is how long will these new orders keep going up?? Oil prices look like they are heading up so will start to drag the economy down.

BTW Just love this blog, keep up the good work.

Simon Ward comments on UK real money pick-up to support economy

Simon Ward — Thu, 15 Dec 2011 16:53:57 +0000

I agree they look a bit low. 4% may be the maximum consistent with hitting the inflation target, given slow trend expansion and further import price pressure from the low level of sterling.

Simon Ward comments on Eurozone money numbers confirm peripheral slump

Simon Ward — Thu, 15 Dec 2011 16:43:38 +0000

Thank you for your comments and sorry for the delay in replying.
DrHans: You are, of course, correct. However, the act of transferring funds out of a country probably indicates extreme pessimism, likely to be reflected in lower domestic spending.
Simon: Assuming that transferred funds represent "dead" money, the boost to core money supply growth from capital flight is indeed artificial. The same applies to any positive impact on the US numbers but the UK money supply definition excludes foreign deposits.

Joe comments on UK real money pick-up to support economy

Joe — Tue, 29 Nov 2011 14:50:18 +0000

Would you agree the OBR's forecasts for nominal GDP growth in 2011 and 2012 (3.4% and 3.5% respectively) look overly pessimistic?

One could reasonably hope QE will support £10-20bn of M4ex growth over November and December; if so a reversal of the upward trend in velocity would be required to depress nominal GDP to only 3.4% year-on-year; closer to 4% looks more likely, though even that is anaemic.

Simon Wallace comments on Eurozone money numbers confirm peripheral slump

Simon Wallace — Tue, 29 Nov 2011 09:33:41 +0000

Does capital flight into the core or out of the eurozone (UK or US I would presume) mean that the monetary data is overestimating any improvement in these areas?

DrHans comments on Eurozone money numbers confirm peripheral slump

DrHans — Tue, 29 Nov 2011 08:33:41 +0000

Simon: I've spent a lot of time looking at this area through the life of the euro. One thing that concerns me is that "Peripheral weakness partly reflects capital flight into the core or out of the euro area altogether but this does not alter the economic implications – money leaving M1 accounts will not be spent domestically." might not be true. If Mrs Papadapoulos puts her euro into Deutsche Frankfurt, say, she can still settle her credit card with them. Let's be clear, I've seen issues here for years and there is a slow bank run going on that the ECB is having to offset at an ever-growing rate, but I think national interpretation of M statistics in the euro area is now harder than it was.

Simon Ward comments on Employment indicators confirm US resilience

Simon Ward — Wed, 16 Nov 2011 17:19:15 +0000

The labour market is recovering but still has a long way to go to reverse the impact of the 2008-09 recession.