We regularly monitor around 30 fund flow series for each of some 80 economies, monthly (and have done since the mid-1980s). These are available for clients to download from our website, and by using an Excel add-in. Which among these timeseries are the key pieces of liquidity data that investors need to focus on? Many have their own specific preferences, but here is our list of 13:

1.    Global Liquidity Cycle (GLI) is our 'headline' index published each month. This is a proven lead-indicator of prospects for risk assets. The series peaks during asset booms and troughs just ahead of banking crises. It leads the business and profit cycles by 12-15 months.

2.    US dollar area liquidity. This includes the liquidity cycles of those countries that use or shadow the US currency. It consistently and pro-cyclically leads the US Treasury 10-2 year yield curve by 3-6 months. More liquidity therefore raises the risk premium on government bonds and reduces the risk premia on other assets.

3.    Monetized US savings flows. This series defined as the difference between US private sector and Fed liquidity is an important lead indicator for the value of the US dollar. Greater Fed liquidity and fewer savings unambiguously weaken the US dollar around 6-12 months ahead.

4.    Emerging Market Liquidity Cycle. Like its developed economy counterpart this data series leads the reported earnings cycle of EM companies by around 18-24 months.

5.    Crossborder flows to EM. This important data series tracks the confidence of global capital and highlights the scale of inflows into EM securities. This is so often a lead indicator of EM outperformance.

6.    Central Bank policy indicators. In short, measures of 'effective' QE policies by the key Central Banks. We regularly compare the US Fed, the BoJ, the ECB, the SNB, the PBoC and the BoE.

7.    Investor exposure data showing the split between holdings of stocks and bonds. This balance sheet data which derive from the same sources as our flow data show actual holdings at each month-end. They are not investor sentiment surveys, but they serve as a robust measure of risk aversion.

8.    Investor exposure to EM against 'normal' benchmarks.

9.    Investor exposure to US dollar assets. This data is based on reported end-month balance sheet holdings of all US dollar financial assets. Shown as a ‘normalised’ series as a proportion of all Worldwide financial wealth.

10.Ranking of liquidity conditions market-by-market each month.

11.Ranking of investors' exposure market-by-market each month.

12.Financial conditions (FCI) measures of short-term credit spreads across all 80 markets we monitor. This serves as a ‘cross-check’ on our volume-based GLI.

13.World financial wealth (WFW) a US dollar aggregate of the value of all liquid asset holdings; listed stocks and listed government and corporate bonds across our databases.

January 2013 Global Liquidity Index (GLI) estimate at 57.8 ('normal' range 0-100) from 64.5 at end-2012. Global trend likely upwards, but ECB liquidity collapses. Full database released to clients. The GLI leads the business cycle by 12-15 months; equity markets by 9 months and bond and forex markets by 3-6 months.

When in trouble DEVALUE. This has been the response of British policy-makers through the past several decades. With the UK economy understandably fragile because of past imbalances and the Eurozone itself weak, British GDP growth is unlikely to step-up sufficiently to hand Prime Minister Cameron an Election win in two years time. The economy is still too structurally skewed towards financial services, housing and State spending. Chancellor Osborne is slated to cut State spending further, but cannot avoid further weakening demand. Therefore, the only option is weaker sterling and/ or more QE. They have appointed a new BoE Governor who is likely open to more US-style easing. Overall, the fall in sterling back to US$1.55/£ is understandable. Further weakness looks inevitable.

We do not accept the argument that the ECBs operating procedures are so different from the Fed and the BoE that a drop in the size of their balance sheet can be read bullishly simply because it supposedly reflects less take-up of distressed borrowing by banks. Moreover, we cannot see how arguing that the EONIA lending rate lies ‘close’ to the deposit rate floor indicates abundant liquidity. First, ECB balance sheet contraction proved the critical signal for the last crisis and low EONIA rates did not help. Second, the Eurozone money markets are not functioning. Problem banks are still unable to get funding and are forced to borrow at higher rates. Third, in the post-Lehman Crisis World where Central Banks increasingly operate interest rate corridors between lending and deposit rates they are able to control both the level of interest rates and the volume of liquidity. In the US and UK, Central Bankers now realise that greater volumes of liquidity decrease market interest rates. Thus, by flooding the system with liquidity, the Fed has successfully pushed investors back into risk assets. In short, the volume of liquidity maters, and matters a lot. Falling ECB liquidity from E1.67 trillion to E1.5 trillion is thus a bearish and NOT a bullish sign.