Payback time for QE looms: And it will be pricey

So wrote Merryn Somerset Webb in her Investing column in the FT Money section of the latest Weekend Financial Times.  I attach the chart she used for the article, and am tempted to change the title of my piece to: How not to Chart.  First, dear reader, take a close look at the chart which I photographed from the newspaper.  Before going on to read the rest of this blog, I would urge you to take pen to paper and note what you think of the graphic.  Please, take your time and look at the detail.

Even though it may not be clear in my image, you will know that the background will be salmon-pink coloured.  A newspaper which prides itself on being a top-notch, internationally renown resource of reliable information; a specialist financial publication helping investors and businesses make important decisions.  This is their thinking and tone, not mine.

The source of the chart is the Bank of England, one that most would hope is reliable – but don’t take my word for it as we have found that the Office for National Statistics is prone to big revisions, the Office for Budget Responsibility likewise restating its forecasts, and economists generally living in optimistic Goldilocks land.

So, to the chart.  Note the complete absence of scales on both axes.  Maybe a mistake but one that subeditors, editors and printers should have spotted a mile away.  Then we have the vertical dashed line; what is this?  When and why?  The most recent data points, are they today?

The broad money line, if the dotted line was the end of QE, suggests that money supply growth has been completely flat; this is not the case.  It has been increasing, albeit too slowly for many over the last 5 years or more.  The yellow line, nominal demand: for what?  Possibly financial assets, or maybe property.  Who knows; labelling very poor.  The Consumer Price Level, and I’m assuming CPI, peaked a few months ago and is now edging slowly lower, something the chart does not show.  Real GDP is/has sagged – over how long since peaking; are we talking Great Financial Crisis and 2009?  Perhaps this a projected rate of change.  Just exactly what are ‘real asset prices’?  They certainly have been a real rollercoaster and I bet it’s unlikely that it’s food.  Inflation, I would suggest, has been more volatile than GDP, so why then does this have the flattest trajectory?

So very perplexing, and disappointing.

I hope you will have access to the full story via this link:


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Posted in Finance, Markets, STA charts, STA education, STA news, Technical Analysis, Trading, Trending
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About Nicole Elliott

Nicole Elliott

A graduate of the London School of Economics and Political Science (BSc Social Psychology) Nicole Elliott has worked in banks in the City of London for the last 30 years. Whether in sales, trading or forecasting technical analysis has always been the bedrock of her thinking. Key expertise lies within all areas of treasury: foreign exchange, money markets, fixed income and commodities.

She has also added to the body of knowledge of the industry writing the first western book on Ichimoku Cloud Charts. Strong media links and a cult following are due to her prescient calls on the markets and often entertaining format.

Nicole can be contacted at

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