Odd Moves in Money Supply

I am unsure of exactly what is going on the weekly flows in the money supply. Up until a two or three weeks ago, M2 non-seasonally adjusted money supply had been tracking the average seasonal patterns established over the last 30 years. Please see the below charts showing the weekly and 2-month changes in M2 non-seasonally adjusted money supply.

Weekly


2-month






The last three weekly reported M2 figures shows divergences relative to the average seasonal trends. Significantly so actually. I am actually at a loss to explain the divergences. Additionally, I am unsure if they indicate anything, will be massaged away with subsequent revisions to the data, or something else entirely. Definitely something to keep on the radar.
 

Dividend Cuts Undercut Story of Economic Growth

The below chart is shows the aggregate 3-month rolling summation of dividend cuts for companies in the S&P 1500. The importance here is that the a high level of dividend cuts, with high defined as 50 or more cuts in any 3-month period, coincidences with periods of recessionary or slow growth in the economy. 



I think this works because companies will usually only cut dividends when business conditions are slowing considerably.  Furthermore, dividend cuts occur also usually only occur when companies see the slowdown persisting. This is why tracking dividend cuts is so important, as it is a window into the current and future economic outlook of management teams.

Currently, the rolling 3-month summation of  dividend cuts is 68, above the 50 company threshold. This is another indicator in a mosaic that suggests that the economy is not as strong, and the outlook is not as robust as some say it is.

Recessionary Condition Risks Increasing Once Again

Following a near indication after the release of Q1 preliminary GDP, preliminary GDP for the Q2 is once again flashing a warning signal that the economy is heading into a recession. As I have mentioned from time to time, one of the measures I watch is the absolute change in change in GDP on year-over-year basis with regards to the recent trend. For instance, a year-over-year trend in GDP less than or equal 1.5% and that has been declining in the near-term has heralded in weaker GDP in future quarters. Here is the latest updated chart showing this dynamic.



Year-on-year GDP is showing growth of just 1.3%, below the 1.5% threshold that marks significantly higher risks of recession. The increase of recessionary risks coincides with warning signals flashing in other measures, fore instance the ISM and dividend cuts. We will have to see if the growth in the advanced GDP estimate remains just as weak. If these estimates are any indication, the risks of a recession will remain elevated if not increase further.

Bernanke Admits He Knows Nothing of the Free Market, Economics, and Gold

S&P 500 Price/Volume Heat Map- 7/18 Trading Day Edition

In yesterday's trading, the S&P 500 gained about 50 basis points in value, again on lighter overall and declining volume since this mini-rally began back on June 24. More ominously- that is if you are long- the market tested and pulled back from the intra-day swing point on May 22, where 244 million shares changed hands on the SPY versus 103 million yesterday.  This suggests the market is stretched and prone pullbacks.

That said, the industrials, financials and energy sectors continue to lead the gains but the consumer discretionary and utilities also chipped in to the overall gains. The overall price/volume heat map more-or-less reflect the the price performance. This is outside of the discretionary group, which is weighted neutral to negative.