M3 Discontinued

On an interesting note - the Federal Reserve has decided to stop publishing the M3 statistic. M3 is one of the broader definitions of "money" and collectively with the other forms of money as defined by the Federal Reserve (re: M0, M1, M2, and M3) - they compose the money supply. As a sustained increase in the money supply is typically associated with inflation - these measures are often closely watched. I am somewhat skeptical about the announcement - as it makes no sense to me - why as a quasi-governmental entity as this point in the game if you want to retain your independent reptuation - you would make a move towards being less transparent. Ironically M3 has been one of the leading inflation indicators over the past 5 years as it has grown at around 8% v. real GDP of around 4%. I have yet to hear a good argument on why they would want to stop publishing it when you know for a fact that they are still doing the research and looking at the numbers themselves - other than to conceal information / "protect" the American public from economic statistics that like many other indicators of our economy are quite shaky.

Official announcement:

"Discontinuance of M3

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks)."

Portfolio note: Not much happening. I want to reshort XLF bad - but I fear losing more money so I am going to watch it instead. It is undeniably one of the hottest sectors in the market right now, and I think we may get an indication of just how much higher it is going by continuing to watch the developments with the Fed, treasury rates, and also the CPI/PPI releases this week.

Broad market note: My expectations have changed drastically regarding the winter rally. I am currently seeing it as the sure thing. Wallstreet is in full time pump mode right now and the crucial sectors are all hot re: tech, banking, and retail. I think that the falloff in oil is also helping to fuel the rally. Most investors appear to be ignoring the rising interest rates and fed tightening. I am basically sitting this one out as my growth stock idea did not pan out and I don't have the conviction to short again here - when the market is this strong. If any one has any individual stock suggestions or inquiries re: companies they would like to see analyzed - please e-mail or post the request in comments and maybe we will take a look. Otherwise I am gong to probably continue to just keep tracking the indicators which I consider significant.

Best regards,

BG