Comparing Global Money Supply Growth with Market Index Growth
Summary
This indicator compares growth in selected central-bank money supply measures with growth in a user-chosen market index. It converts country M2 data to approximate US dollar values using exchange rates, then weights the selected components by their converted sizes. China’s contribution is discounted to reflect capital controls. An optional US component blends M2 with a net-liquidity measure defined as Federal Reserve assets minus the Treasury General Account and reverse-repurchase balances.
The difference between liquidity growth and index growth is presented as a divergence, with configurable thresholds for a buy-zone display and alerts. The script also offers rolling and lead-correlation statistics to inspect whether liquidity changes have preceded index changes. These are analytical displays, not evidence of predictive power: the document reports no validation results, and the output depends on economic data availability, currency conversions, chosen inputs, lookback settings, and the comparison ticker. Its buy-zone label should therefore be treated as an indicator condition rather than a demonstrated trading recommendation.
Key ideas
- The indicator compares selected global M2 growth with growth in a chosen market ticker.
- Country money supplies are converted to US dollars and weighted by their converted values.
- China’s M2 contribution is reduced, while optional US net liquidity subtracts Treasury cash and reverse-repurchase balances from Federal Reserve assets.
- Divergence thresholds, correlation statistics, and alerts help visualize relationships but do not establish predictive performance.
- Data coverage, exchange-rate approximations, and user-selected settings affect the resulting measure.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.