Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

All-round Multi-Asset investor. Former head of a EUR 5 billion multi-asset fund range. Speaker. Charts & Frameworks. Founder of True Insights, a provider of independent investment research, trade ideas & well-diversified portfolios.
https://true-insights.net/

Global Multi-Asset Investment Strategist

‘No,’ Money Supply Growth Is Not Your Ultimate Inflation Forecaster

Weekly Market Monitor (17) - Banking Anxiety – Back with a Vengeance!

Systematic Macro Investors Represent USD 300 Billion in Selling Pressure!

Operating Leverage in Reverse: The Impact on Equity Markets

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True Insights

Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

Cross Asset Strategy

<ul>
<li>Year-On-Year, M2 broad money supply has dropped by 4.1%. The 6-month annualized rate of decline is a whopping 6.5%. </li>
<li>As a result, Excess Liquidity (Money Supply Growth - Nominal GDP growth) has turned very negative, revealing money is being drawn from equities at a historically rapid pace.</li>
<li>Given the historical relationship between Excess Liquidity and Valuation, the forward P/E ratio of US Equities must drop to 16 from 19 for the two variables to align.</li>
</ul>


Year-On-Year, M2 broad money supply has dropped by 4.1%. The 6-month annualized rate of decline is a whopping 6.5%. 
As a result, Excess Liquidity (Money Supply Growth - Nominal GDP growth) has turned very negative, revealing money is being drawn from equities at a historically rapid pace.
Given the historical relationship between Excess Liquidity and Valuation, the forward P/E ratio of US Equities must drop to 16 from 19 for the two variables to align.


Money Supply-Driven Excess Liquidity Unveils 20% S&P 500 Downside Blog