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When The Fed Doesn’t Want Us To Know How Bad It Is

This is what it does. It stops publishing good data, and either substitutes no data, or shitty data.

I rely on the Fed’s weekly data in my research. I want to know what’s going on as close to real time as possible. It’s simple. As traders, we need current data, or as close to current as possible.

The Fed’s new format H6 money supply release is utterly useless. They stopped weekly publication.  As of February 23, the report now includes only monthly averages, and is released only on the 4th Tuesday of the month for the preceding month. So current data, as the average for January, is effectively Jan 15.  This is virtually useless.

When the Fed doesn’t want you to know what’s going on in near real time, this is what it does.

Fortunately, there’s a perfectly good workaround.

They still publish the H8 commercial bank data weekly with only a 9 day lag. That report has data that is very similar to the old H6 data, so I can substitute that in my analysis. I have to rebuild multiple data sets and charts, which is causing a bit of delay in publishing an update for the macro liquidity data.

I was hoping to publish a composite liquidity report today, but I’ll have to push it back to tomorrow, if all goes well.

Let’s just hope that as financial conditions deteriorate and the bond market collapse starts causing massive collateral damage that the Fed doesn’t retract weekly publication of the H41 and H8. That would be devastating to our ability to understand the market context, and to forecast probable outcomes.

But as things get worse, I have no faith that the Fed will continue to allow us to peak behind the curtain at the Great and Powerful Oz.

We’ll always have technical analysis, but without the context that liquidity measures give us, it would be a lot tougher. So let’s hope that they’ll publish the H41 and H8 in their current forms for as long as we’re around to observe and analyze.

Here’s a look at one of the new charts with H8 data replacing the old H6 data on bank deposits.

Equities vs. Cash Preference
Equities vs. Cash Preference

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Posted in 1 - Liquidity Trader- Money Trends
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