Monday’s post argued that a positive view of the global economic cycle should be maintained until either global real narrow money expansion slows further or the longer leading indicator calculated here turns down. Available monetary data suggest that six-month growth of G7 plus E7 real narrow money rose in August, partially reversing a decline in June / July – see chart.
August statistics have been released by the US, Japan, China, India and Brazil, together accounting for about 60% of the G7 plus E7 aggregate. The recovery in growth was entirely due a rebound in Chinese real M1 following weakness in July – see Tuesday’s post. The final August reading will depend importantly on Eurozone data, released on 26 September.
Slightly weaker real money expansion since the spring suggests that global economic growth will moderate around year-end, while remaining respectable – a benign scenario, in theory, for markets.
