날짜: 27 September 2013
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M1 and Credit...
For all of those who get carried by e.g. rising business climate indices and the like this may serve as a little reminder.
A monetary economy (and its incomes and corporate profits), by definition(!), cannot grow without positive growth of credit, which in turn leads to growing deposits. As reported earlier today, in Germany loans to private households and businesses shrank a negative 2.8.pc in August. Credit to the public sectors fell a negative 0.9pc y-o-y. Total loans were down a negative 3.2pc vs. the year-ago level (red graph in below chart).
All of this spells trouble for overly optimistic earnings forecasts and it should, on the other hand, portend a (much) better bond market. Today the Bund future violated its long-term down trend line.
Total Eurozone credit to the non-financial sector also fell and marked a new all-time low.
M1 growth rates declined further (blue graph) thus reducing hopes of higher economic activity in the months ahead.