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Monday, March 01, 2010 5:08:18 PM
CHART OF THE DAY: Why This Market Needs Cheap Money To Keep On Rallying
Joe Weisenthal and Kamelia Angelova | Mar. 1, 2010, 1:41 PM
The key story of the moment is the beginning of the Fed's tightening cycle, a topic on which Morgan Stanley analysts recently dedicated a major report.
In it, the company explored the historical connection between cheap money. As you would expect, the market likes it. A lot.
As the below chart shows, the S&P 500 has been nicely correlated with excess credit growth -- or the change in non-financial credit. This latest rally was no exception. When the Fed does close the spigot, watch out below.
Joe Weisenthal and Kamelia Angelova | Mar. 1, 2010, 1:41 PM
The key story of the moment is the beginning of the Fed's tightening cycle, a topic on which Morgan Stanley analysts recently dedicated a major report.
In it, the company explored the historical connection between cheap money. As you would expect, the market likes it. A lot.
As the below chart shows, the S&P 500 has been nicely correlated with excess credit growth -- or the change in non-financial credit. This latest rally was no exception. When the Fed does close the spigot, watch out below.
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