In Sunday's "The secret to stocks’ success so far in 2023? An unexpected $1 trillion liquidity boost by central banks." I forgot one very important consideration, a point made by Joe Carson a few months ago:
Sunday, January 1, 2023
From economist Joe Carson's The Carson Report, January 1:
The inverted Treasury yield curve has raised concern over the risk of recession in 2023, and for a good reason. An inverted yield curve has occurred before the past eight recessions. Yet, something is awry. Banks are not restricting credit as they typically would with an inverted yield curve, and businesses and consumers are borrowing at banks at the fastest rate in fifteen years. What's up?
The thinking behind the inverted yield curve is that banks slow and eventually stop lending when bank funding costs exceed what banks can earn by lending. Yet, bank credit has been accelerating throughout 2022. The latest data for November shows bank lending to businesses, real estate, and consumers rising 11.8% over the comparable period one year earlier. That's the fastest annual growth since 2007....
....MUCH MORE
We will be referring back to this rather astute observation after the next CPI report (or five).
Some previous visits to The Carson Report:
December 2A "Pain-Free" Tightening Cycle For Companies Is Not How Fed Tightening Cycles End
Our boilerplate introduction:The author, Joe Carson
is the former Chief Economist & Director of Global Economic
Research at Alliance Bernstein. Prior to that he was Chief Economist at
Chemical Bank and at Dean Witter, firms he left in such rough shape they
were forced to merge with JPM and MS respectively. (Just Kidding Mr.
C.)...
September 30
"Is Deflation A Risk, Or Are These Prognostications A Spurious Call For A Fed Pivot?"
June 22
"Peak Inflation Is Hollow: It Provides No Context To Reduction in Speed or Duration of Cycle"
Here is Mr. Carson's site, The Carson Report
Here's the current situation via the Federal Reserve Bank of St. Louis' FRED database:
As can be seen, though down a bit from the January 25, 2023 intermediate-term high, it appears that, at best, the growth has only flatlined, that there is still an enormous amount of credit-money sloshing around the system.
