That is indeed one of my points about EONIA - it slightly led and was a harbinger of troubles in 2008. Of course it follows ECB actions too, although the correlation isn't as high as you may think.
As far as swaps, I think they're not as reliable (although they are useful, for sure) due to intervention like the recent Fed swaps and I also and primarily do not believe that they're completely above board - if for no other reason than activities like HFT, dark pools & similar. But again, my main points are that both swaps and EONIA aren't showing anywhere near the stress of 2008 - same with the fiddled LIBOR - and that the overall situation is more political and power grab related than it seems on the surface.
Truth on ECB intervention effectiveness with both LTRO and EFSF funds - time will tell, especially against that nebulous debt deflation issue and its effects on total money supply and the growth trend.
M3 wise, yes - we've been going 'round & 'round for a while now in good natured 'tweaking' in the area... and you also know that I think that my (original, 4 months before John Williams' one) M3 reconstruction is slightly superior. It tends to lead TMS & AMS since it has Fed components in it, and the Austrian ones only go back to 1959(?) or so where M3 goes back to 1867. The Austrian ones also give false signals too, of course.
And all three tend to track each other fairly well is the bottom line as my charts a few posts back show... and all three don't take credit or gov't debt growth etc. into account too (both of which represent actual spendable money), which is an Achilles heel and the primary reason in my opinion that they all occasionally give false signals.
As long as we're in a hard asset cycle, I've also found that real total money supply (including velocity) going up is *always* followed by gold going up although gold has been known to sniff it out and lead like in 1976.
I'm still expecting below $1533 before year end, and more than a small possibility of low to mid $1300s before the bottom... and as usual, that and $4 will buy one a cup of decent coffee. |
