Matt King Sees a $1 Trillion Liquidity Drain Heading for Markets

to taken out in order to get inflation back to target. Now, our guest Matt King brought a lot of charts to show us, and those charts are referenced throughout the conversation. So if you want to see those charts and follow along with them as you listen, you can find a companion article for the episode at Bloomberg dot com slash odd Lots, or you can watch a full video version of this episode at YouTube dot com slash Bloomberg Podcasts. Thank you and enjoy. Hello and welcome to another episode

of the Odd Thoughts podcast. I'm Tracy Alloway and I'm Joe wisnal Joe. It feels like it's been a pretty whiplashy start to the year. Yes, it felt like there was that moment in February where maybe there were signs that inflation was cooling, people were talking about a soft landing, and then just a few weeks later we're talking about inflation being entrenched. Maybe the Fed has to go even harder on the terminal rate. It just feels like it changed so quickly. Absolutely, I mean, and I think even

like January it was still recession watch. So it went from recession watch to soft landing to landing to no landing overheating fears again. And yeah, quite a lot of ambiguity for this short of time into the year. Okay, Well, when we have ambiguous macro environments, there was one man that we like to turn to an all thoughts favorite, and we need to talk to Matt kid Over at City Group. Well absolutely, and it's like, okay, has anyone

gotten the last few years? Right? Completely? No. But the last time we talked to Matt was in late twenty twenty one, and he said, inflation isn't transitory. It's going to be hard. This isn't coming down anytime soon. And I think in early twenty twenty three, March twenty twenty three,

people would say, yeah, that's pretty vindicated. Yeah, I remember in that conversation He also talked about the possibility that the FED might need to induce a recession to bring inflation down, which, again in late twenty twenty one, not conventional, right, that was not the consensus. So we need to check in with Matt, and I am very happy to say that we have him here with us right now. Matt, Thank you so much for coming back on our thoughts. Thank you very much for inviting me. So how would

you characterize the current environment? Where are we in this sort of macro cycle? I would say that markets are still in frul to central bank liquidity to a much greater degree than is widely appreciated. That this is contributing

to the uncertainty about the underlying economic outlook. So, as I say, at the central puzzle is, how is it that with the inplacent proving stickier than many people imagined, and with central banks basically being hawkish on the back of that, and with yields and real yields rising again, how is it that risk assets are doing so well?

And most people would say, oh, it's because the economic data of surprised positively and the economy is more resilient, and maybe we can have this soft landing on the landing or whatever, and unfortunately my work puts this in a rather different light. For me, the big factor which has contributed to the strength of risk assets beneath the surface is the way in which even as the central banks have told us that they're going to be doing qt, actually when you look at the details, they've ended up

doing QE. They've injected over the last three months a trillion dollars of liquidity and on my framework, that equates very directly into ten percent directly on equities, and the moment that you think of it in those terms, it just puts the whole outlook in a very different light. Can you explain what is the mechanism bro which you would say central banks are still adding to liquidity, because of course we know we're in one of the huge historic hiking cycle, not just in the US but elsewhere.

What is actually going on this liquidity expansion? So the main thing that I look at is reserves or changes in reserves on central bank balance sheets, and the main mechanism I think as at work here is the portfolio balance effect or how much money have we given to the private sector in the form of reserves or deposits.

But its reserves that correlates best relative to how many securities are available to absorb that, and it's actually at the FAT in particular, where over the last couple of years it's become really apparent that changes in reserves correlate much better with changes in risk than looking at securities, which is made of the obvious way of doing this, And I think the underlying explanation is that money growth has always been important for markets, but over the last

decade changes in money growth have just come overwhelmingly from often technical changes on central bank balancies. When the FED or other central banks are adding all withdrawing four or five hundred billion dollars of liquidity, sometimes even in a single week, there's nothing the private sector is doing on anything like that scale, and so it has this outsized

impact on markets. Well, just on that note, talk to us about where the liquidity it has been coming from, because I think, as you mentioned, most people when they think about central banks at the moment, are going to

be thinking about balance sheet reduction. The FED has said that it's started QT, although clearly there's a lot of disagreement about whether or not it practically has, and in other parts of the world central banks have been raising rates and withdrawing liquidity, so where is that access coming from? So this gets quite geeky quite quickly, but I think

it's the most okay. So roughly, depending a little bit on when you measure it, this trillion dollars has come about two hundred and fifty billion dollars from the BOG, about four hundred and fifty billion dollars again depending on when we measure it from the PBOC, and about three

hundred billion dollars also from the ECB. In addition, the FED was draining liquidity and reducing reserves last year and this year, even as the QT has continued and securities have been coming down, reserves have not actually been falling. So the fence contribution is technically zero. But again, as you said, say, that's surprising when notionally they're doing QT.

And each of these has its own story, and I'm probably more confident in the framework than I am in the outlet, but when you start talking at trillion dollars over three months, it just has this massive impact on markets. How has the FED been doing QT, continued with its quantitative tightening, and yet in twenty twenty three we haven't

seen the decline and reserved in the US. So the way that I tend to analyze all of this is almost just empirically, what correlates best with markets, and specifically what's been going on is the change in reserves. The FED in particular is influenced by not only the change in securities what most people think of as QT, but also the change in the Treasury General account whether you as treasury deposits money at the FED, and the change in RRP, where money market funds deposit money at the FED.

And it's actually even reasonably intuitive as to why both of the have an impact. So if, for example, the Treasury is issuing a lot more bills and you take money from your bank account to go and buy those bills, but then they don't send you a stimulus check, or they don't spend the money in the real economy paying employees or whatever, and they just lock the money away on the FED balance sheet, well that's kind of like QT.

The private sector has got less money. There are more securities needing to be absorbed in markets, And empirically what we observe is that in periods where that's happening, like January February last year and April May last year, securities may or may not be going down, but is reserves

full risk trades off. What we've had this year, or in fact over the last six months or so is that even as securities have continued to roll off, that impact has been offset by declines in the Treasury General Account and then to a lesser extent by declines or moves in RRP. That means that even as the FED has nationally been typing and reducing the balance sheet, actually

in terms of what matters for markets, it hasn't. And what we've seen over the last few months is, whereas last year you could explain almost everything that was going on in terms of the FED balance sheet and only the FED balance sheet, what's become relevant over the last three months is to look at equivalent processes going on elsewhere.

He mentioned the portfolio substitution effects, and I think when we talk about the impact of liquidity on markets, it's sort of like an abstract thing, and could you maybe explain to us, like in detail, what is the process by which a liquidity injection And I suppose it will depend on the form, but like, what is the process by which that gets transformed? Into a greater bid for

risk assets. So I do all of this empirically by looking at what correlates effectively with market moves and everything I've observed, and I tend to work with the theory afterwards. But I do think there's a unifying theory, and as I say, it's basically portfolio bounds. But everything I've observed over the last decade or so where quee has dominated all of my underlying fundamental relationships that used to work, suggests more or less the opposite mechanism from what you

hear from the central banks. So there was a lovely article by Bill Dudley on Bloomboad just the other day saying, oh, it's the level of the reserves that matters, and this all this money change is irrelevant, And on everything I see from markets, my chart suggests the opposite is the flow,

it's the changes. Similarly, the central banks tend to assume once they've announced it it's in the price, and instead I find it's only as the liquidity hits the marketer or is with born from markets, that we see incapable of pricing it. In the central banks always look for an impact on government bond yields and think in terms of reducing duration from bond markets, and then everyone updates their dividend discount model with a new estimate for the SMP.

That's not what I think is going on at all. For me, it's all of it. It's kind of simpler and cruder, and it's really about this balance between how much money has the private sector got relative to how many assets are available to absorb that money. And when say the treasury or another private borrower borrows in markets, yeah, that creates some bonds or some bills that somebody needs to buy, But if they spend that money in the real economy, that kind of nets out. It's closer to

being self funding the people imagine. And in fact, that process of money creation is the system gains assets and liabilities is associated with risk on que though is kind of doubly powerful because it simultaneously gives the private sector more money in the form of reserves or bank deposits and deprives them of the safe assets like t bills or bonds to go out and investing, and crowds investors

into riskier assets as a result. And it's sort of unsatisfying in a way because you can't see all these moving parts. I think what goes on is the guy that would have bought bills by his bonds, the guy that would have bought bonds bys ig credit, that would have bought ig heal, and so on. You can't see

all of those moving parts. But this helps to explain what is otherwise a significant puzzle, which is how can I have all these lovely charts that point to strong relationships, but it's always between queue and risk assets and equities and credit spreads, even though all of the action is mostly in treasuries and government bonds around the world. I

like this daisy chain. It's like someone buys the bill buyer buys bonds, the bond buyer buyers treasury is, the treasury buyer buys corporates, the corporate buyer buys junk, the junk buyer buys stock, and the stock buyer buys doge coin. And that is like the It's like that little domino meme, right, It's like that slight change that's some dgen way out at the end of the chain is like buying crypto.

But here's my question. Listen, just since you mentioned that, ironically, the best correlations I find of all are exactly with the most popular assets like cryptocurrency. You'll like test la stop for example. It's just amazing how it shows up there in the in the hottest assets, even though the

correlation applies more broadly too. But let me just ask you why there isn't a simpler answer to all of this, because I'm just looking, you know, I can look at the SMP, or I can look at the relationship between QQQ and the SMP. You know, something that's more hibta And in Q four of twenty twenty two, we got a string of pretty encouraging inflation prints that said, ah, it's finally happening. Lots of people saying, yes, it is finally coming down, a lot of confidence from the Fed disinflation.

We can feel confident that the inflationary process has peaked. And then in the last you know, the for you know, after starting in the middle of January, people started saying, no,

maybe it hasn't. And we're starting to see some upward surprise and used car prices, and we're starting to see some ongoing firm dison rents, etc. And why is that real activity not a sort of useful way, because that would seem to my mind, also explain the trajective risk assets, this fact that inflation is not coming down the way we might have thought in Q four twenty twenty two.

I agree that that's probably part of the explanation. But if fundamentals were as strong a driver as people traditionally think, all my stupid charts with central bank balance, she shouldn't work at all, and instead so they are most of them all right, Sorry, sorry to keep going like they

were better than most of the fundamentals. Other ways of saying it are when we look at the moment, the economic surprises on the city economic surprise indicies, yes, are very very positive, but the economic data changes are not. You know, we've raised our growth forecast globally by by thirty basis points, but it's still to one of the lowest levels two point two percent, one of the lowest levels over the last forty years. Is that really enough

to make you super excited to put back? It might be if I thought that we were going to if I thought two months ago that we were staring down the barrel of a hard landing. Yes, true, But the sort of explanation people normally come up with this all the central banks are being really dovish, and then you have power and the guards saying no, we're not being devish. We're going to stay the course because the most important thing is inflation. You just get to disconnect if you

try and explain it in those terms. And I think what people are trying to do is they're trying to retrofit fundamental explanations to price action that was actually driven by these technicals. So your contention is that the that we've seen recently doesn't really have anything to do with what's been happening in the real economy, as evidenced by

the collapse in private money. But if you look at what's going on with public money i e. Central bank balance sheets and things like that, the correlation is much stronger. That puts it slightly too strongly. But yes, okay, basically okay. So one thing like I was kind of wondering just on this topic is if you look at China, I mean, China is currently a place that wants to stimulate I guess, but seems to be having a hard time convincing private

companies to actually go out and borrow. Can you talk a little bit more about what you're seeing there? I think that's a very good description of it. So we debate this because the Chinese, the cridity injection in December was so large, they've been a little bit late publishing the January number. But as you say, what we see and have seen over the last few months is normally at this time of year we're falling off our chairs with the sheer magnitude of the total social financing them

as the broad credit us in China. And what we've seen the last few months is actually total social financing in particular has been really quite disappointing. Even M two, where growth has been of its struggle has not been not surprised to the upside. And I think for me this is part of a broader story that has maybe two legs. The first of them is that what we've seen over an extended period, I mean literally decades, is one economy after another kind of getting saturated with debt,

even as it's been cheap to borrow. So Japan drove the world borring until nineteen ninety. Since then they haven't wanted to do much. US and Europe drove the world's boring until two thousand and eight. Since then, the private sector hasn't wanted to do much on What they're doing is often for share buybacks, and that's where China is

stepped in. But even in China recently, it feels as though you're kind of getting this saturation where it's the state run banks lending to the state owned enterprises rather than as you say, the private sector of ball and

oroughly wanting to borrow. In addition, what we tend to feel is that even as the authorities are intervening and providing support and injecting liquidity to banks at the moment, it's not that they want a new investment and real estate driven boom in the same way as they've targeted in the past. Instead, they're trying to achieve the rebalancing to all the consumer that they always wanted. And as a result, you see that kind of relative disappointment in

the broad credit metrics and in the credit impulse. The implications for things like commodities and the rest of the world are much less positive than they have been in previous investment lad booms. Consumer related stuff we still see the positive, and things like China equities we still see the positive. But if what I care about is those credit numbers, it all feels a bit more halfhearted than

we used to perhaps in the past. And even as there's been some narrow liquidity injections on the central bank balance sheet recently, again it feels to us as though those have been a bit extraordinary and it would be a mistake to extrapolate them through the rest of this year.

So this era of large bank central bank balance sheets, I mean, it really started in the wake of the Great Financial Crisis, and all the central banks cut rates to zero, could not cut further, and so had to use balance sheet activities to compensate for their inability to cut rates any further. By large, they didn't want to go negative. But the reversal of that sowenty twenty. You know, we saw some reversal of that in the mid twenty tens when the rate hikes and the quantitative tightening. Then

we're seeing the reversal of that. Now you've been talking about what the trajectory is a balance sheet, what is the role of the tightening, because Okay, yes, it's true, as you point out that in some cases bank balance sheet central bank balance sheets still are growing, but we do know that they're all tightening, and that part has not really changed. What is the rate effect and how does that affect either markets or what we see in

the real economy. So this is unclear and I have a very different view from the central banks and traditional economists. And this comes back to what I was saying about versus level and Mervin King has been doing some nice talks for city clients where he actually echoes the points that I'm making about the flows of money being important.

So in the central bank models, not only is inflation potentially self reinforcing, but also the level of rates almost mechanically, without looking at flows of money, growth is thought to translate through into inflation. And never mind that over the last decade until recently, that didn't seem to be happening. Again, they don't have money growth or a did financial markets more broadly, and therefore again it's the rate levels, which

for them are super important. And the way I think about it is instead, no, that low level of rates counts only if it dry, if it stimulates somebody to borrow, and even when it comes to them and things like unemployment. Again, it's the changes that are actually more associated with recessions

rather than the levels in themselves. And while I'm open to the possibility that actually there is now more momentum in the economy because of green investment or some of the other things that people are speculating about as drivers of an increase in our star. In general, I don't see that. What money growth I did see as often defensive stuff like credit card borrowing, and seems now to be reducing being killed off by the rises in rates.

The bank lending surveys are all showing tightening, And my general impression is that actually, while the M two and the M three numbers may exaggerate the tendency and the negativity because to some extent those are influenced by QT, in general, i'd say central banks and economies assume that there is a momentum there which would have been the case in the past when it was the private sector driving the money growth because rates were too low and

they had a great investment idea or whatever. And this time around, while we had the bigger surge of money growth since the Second World War, it never came from the private sector. It came from the fiscal students. It came in the que that had already been turned off even before the rate hikes started, and all this to

my mind, points to the risk of overtightening. I'm not convinced that there is this super strong momentum which the central banks tend to assume, and yet they're in a really difficult place because the lags are so long, and it becomes really it's almost impossible to tell the difference between a two year lag on inflation and then converse relative to money growth and then conversely, Oh, a genuine d anchoring and decoupling, especially when you claim that the

inflation transitory to begin with, and then we're disappointed that it took longer to go away than you thought. This was going to be my next question on the long and variable lags. But talk to us, like, what evidence are you seeing right now of higher interest rates impacting not markets but the real economy, And what are you looking for in terms of signs or evidence that they

are in fact having an effect in many respects. This is hard because those lags are long, and also because there's been so much turning out of debt in recent years that makes it kind of difficult to tell. So let me answer that a different way. Some of that I lead to our economists, and you were seeing weakness a housing market, and then in the US housing market is re strength and you're still getting weakness in other places. But let me maybe answer onto this a different way.

So one of the puzzles of the last few cycles, in twenty eighteen in particular, is that in general, it's taken lower and lower levels of real yields to kind of end each cycle until now, and each time what caused the pivot was effectively dysfunction in financial markets threatening to feed through into the economy. And each time there's

been more debt into the system. And maybe there's that's part of the explanation as to why it was a lower rate each time, And in twenty eighteen to nineteen in particular, it's not the case that anyone was running around saying, oh I can't roll my corporate debt or oh I can't pay my mortgage. Instead, what you had was weakness in equities and the weakness in the housing market threatening to feed through into something broader. And it was that that coupled with broad of his about deflation,

which allowed the FED to pivot relatively rapidly. Now this time around, we haven't had that to anything like the same extent. Again, we've seen this year. In particularly last year, we had an orderly sell up infant markets. This year we're rebounding. But you get this debate as is the

recession postponed or invoided entirely. And while there are some signs of more ongoing momentum in the US consumer in particular, perhaps than I had imagined previously, in my economists have had a better call on that, I'm still deeply suspicious that a lot of the exuminents in markets has come because of this stealth que from the global central banks.

And then in addition, it's just that the lags are long before you see that equity markets are correcting downwards and house prices are correcting downwards, and then the stock of eating accumulated savings begins to diminish. And the main thing that would convince me that I'm wrong on all of this is if we saw a significant upturn in the loan growth numbers, in the money growth numbers, and it looked resilient, and that's not what I'm seeing, and

so and so. There's a similar debate with respect to when I speak to corporates themselves. Yes, everyone's having difficulty recruiting workers in hotels, and restaurants in particular. And yes, there's this pent up demand for things that weren't possible during lockdowns. But the question I keep coming back to is are the corporates saying we need to build more hotels and restaurants? Again? Is there this longer term demand?

And I'm not nearly as convinced as many people are that everything has turned around as much as people like Ian. Maybe some of the backstory here, if I may, is I think again, this difference between how I think about it and how the central banks think about it. So the central banks are really embarrassed because while everyone has had difficulty forecasting inflation, Oh it's a hair chart, It's a Medusa chart. I love that exactly, the hedgehogs over

there form fines. So not only have they been surprised by the inflation being higher than they expected over the last couple of years, but of course for the preceding decade, yeah, they kept expecting more inflation and then there was less. And so they're really having to scratch their heads and say, what is it that's turned one hundred and eighty degrees and caused our models to go, you know, wrongly in

one direction in this is it direct. This is one of the themes that I'm going back to, this idea of like the twenty twenties being the inverse twenty tens and that hair chart, hedgehog Medusa chart what have you is a good example. It's like, first, you have a decade of perennially over your your your inflation expectations being perennially over optimistic or too high, and then maybe what

are we going to have. It's possible that we have a decade now of continuing to expect that inflation will come down sooner, you know, I want to go back. And seems like part of this debate is and the sort of the variability of the long and variable legs impact on en And it feels like the fat is the belief that these lags are much shorter that there used to be. The instantaneous financial market effects reflect the speech.

Paul gives a speech, even if he doesn't raise rates, then it all reprices and then the actual rate rises are a mirror formality after that. And it sounds like from your point of view, it's like the actually you still have these long lags because of things like well, how companies turned out their debt, and eventually they are going to have to roll them over, even if they haven't yet. And when that rollover happened, there will be a kick up in their interest costs and that will

create a burden on investment. So it sort of sounds like that's where the tension is in your view is simply no, there really are still long and variable lagged all these rate hikes that we saw in twenty twenty two, their impact is still coming. Basically, yes, maybe I have a particular view there. I'm not an economist, I'm a strategist, and so for me, asset price inflation and CPI inflation

have always been two sides of the same coin. Now this central banks gave up on money growth in the eighties and nineties when they said, all there's lots of money growth, but there's hardly any inflation. Our job is to control CPI inflation. So this money growth thing is useless and let's stop using it, or in the FEDS case, you can stop measuring some of the metrics they ran previously. And for me, though, and I think virtually anyone in

financial markets, it's kind of obvious what went on. We had asset price inflation instead, and those correlations that break down with money growth. Even if you build quite crude models where you put together asset price inflation and CPI inflation, there's correlations that break down with CPI inflation. They basically

carry on. And so for me, what we're seeing is, as you say, not this drastic, drastic turnaround where something you know, the globalization shifting to deglobalization and long and persistent inflation instead. For me, no, it's just these long time lags, and there's a very clear pattern. It's that the Surgeon money growth showed up first in asset price inflation, then in goods price inflation, now in services inflation, and

yes in things like wage growth. But the lags are long enough that it's really difficult to tell whether this is genuinely persistent. Let me ask it a double advocate question. Could the correlation go the other direction and where it's the surgeon asset prices creating the surge in monetary aggregates.

And the reason I ask that is because there are models of the economy, more managers and bank lenders, etc. Look at the price, and I'm going to be more likely to make a mortgage loan if I feel like this is an ear where house prices are going up, I'm going to be more likely to approve a business loan if this is an err where stock prices are going up and the company is likely to be able to tap the equity market. Could it be that some of these charts, which do seem to show a compelling

relationship go from assets first to money supply next. You are certainly right that the relationship often works both ways. It's not only the credit growth stimulates the housing market, it's also the the buoyant housing market encourages more credit growth. But if it only worked that way, then this chart

shouldn't work. Then I shouldn't be able to find a really nice relationship going back to the early nineteen hundreds where the money growth in the US links through to real estate, but with about a one and a half year leg. So, yes, you're right, that's part of it. But for me, money growth is still the best driver. And to come back to this question of lags, it's reasonably short when I look at things like the equity market,

especially now that central banks are driving it. But the link to real estate is about one and a half years. The link to commodities prices is about one and a half years. The link to CPI is harder to tell because the relationship is weaker, but as far as I can see, it's something like a two year lag. Now that puts the FED in a terribly difficult spot because you're not going to see the impact of even the first rate ikes until late April twenty twenty four, never

mind the hikes that you're doing at the moment. You know, Matt, you emphasized that you are indeed a strategist and not an economist, and on this podcast you're you're somewhat famous for the sort of flows before pros idea, this idea that you know, for many years post financial crisis, it made sense to just follow the money and never mind

whether valuations were reasonable or not. If we assume that liquidity does have a big impact on markets, which you argue it does, and if it does seem like all these one off, sort of stealth liquidity injections are now going away, what should investors do here just flee on mass or what would be your recommendation? Actually, the outlook for the various liquidity factors is complicated. For all of them.

The surge feels as though it's been extraordinary. There is a lot of debate as to just have a negative or at least positive they all become on balance, though, Yes, what I think we have seen is an extraordinary three months. Yes, that's left equity and especially riskier credit valuations at levels where I don't like chasing them at this point, especially for the more expensive equities, which is still the tech sector and the growth sector. And still the US are

relative to the likes of Europe. If we want risk on positions, we would tend to do them through currencies or reversus dollar, or through regional preferences European versus US equities, or maybe you can say the same thing about China.

But yes, you're right. The biggest problem that we see generally is that for every individual asset class that considered in isolation, might seem sort of attractive, what really matters is is that the valuation relative to money market farm is, especially in dollars, and so you know, IG credit, for example, has some the best fields available for the last decade, but actually the pickup relative to money market funds or deposits is actually the lowest it's been in multiple decades,

and so that does argue for significantly increased allocations to cash and cash equivalents exactly those things which were basically uninvestable over the last decade. All right, well, Matt, we're going to have to leave it there, but it was fantastic having you on the show once again. Really appreciate it, Joe.

You know what I just realized. Tell me the last time we spoke to Matt, I think we ended the discussion by saying that we wished that we had a video product because during the conversation Matt was bringing up

all these different charts and showing them. So now we're finally able to do it and show off some of the So if you just listened to this episode on up Apple or Spotify or something like that, go to you find this on YouTube where if we had the charts that he was bringing up during our conversation, we're going to have a video or we're also going to write a post with some of the charts, or as many of the charts as possible, so you can read

a story about this with all the charts. Because I love the way talking to Matt, how he brings up all his charts in real time. It's very fun. Yeah, and the charts are excellent, especially the hair charts, which I can never get enough of. But I do think he hits on something. You know, this overall feeling in the market at the moment, which is it does feel a little uncomfortable that we still have this overarching question of is inflation coming down? Yeah, our central Bank's going

to have to go harder. I mean people are talking about terminal rates at like six point five percent now, which seems extreme, and you would think that would have more of an impact on asset prices. Yeah, I mean

it is really striking. I mean it's still you know, the fundamental story still seems like it explains something, especially like setting aside what markets have done in twenty twenty three, as you talked about in the intro, a lot of people have gotten suddenly anxious about the overheating and so you see it if today we're recording this ten year back above four percent, etc. But on the other hand, he's right, and one of the charts he showed during

the conversation specifically had the title of like monetorism has gone out of fashion and he's coming back and at one hundred percent true. The out of fashion part, I think especially in the twenty tens. Yeah, no one was talking like M two and all that stuff. And so then the question is does this become once again as sort of like the eighties, like the Vulcan Era, or these monetary aggregates become a sort of like central focus for how investors view the economy bringing back M two. Yeah,

let's do it. It is true though, that you can have both things, right. You can have you can have technicals that are a tailwind for risk assets and also have fundamentals that so far because of the long and variable lags that Matt was also laying out like pretty strong. Its traces look pretty good to me. All right, shall we leave it there? Let's leave it there. This has been another episode of the Old Blots podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and

I'm Joe Why Isn't All? You can follow me on Twitter at the Stalwart. Follow our producers on Twitter, Carmen Rodriguez at Carmen Arman and Dash Bennett at Dashbot. Follow all of our podcasts at Bloomberg under the handle at podcasts, and for more Oblots content, go to Bloomberg dot com, slash oddlots, or we post the transcripts. In this case, we're going to post the charts as well. We are going to Tracy and I blog and we have a newsletter that comes out every Friday. Go there and sign up.

Thanks for listening.