It's been 90 years since M2 money supply has contracted by at least 2%.
Who needs a theme park when you have Wall Street. Over the trailing two years, we've watched the ageless Dow Jones Industrial Average (^DJI), widely followed S&P 500 (^GSPC 0.12%), and growth-dominated Nasdaq Composite (^IXIC), roar to new all-time highs, plunge into a bear market, and regain their luster, once more. This short-term roller-coaster ride has new and tenured investors alike wondering what's next for Wall Street.
Although it's not an economic datapoint most investors would think of turning to for guidance, U.S. money supply may hold the answer as to what's next for stocks.
M2 money supply hasn't done this since the Great Depression
Though there are a few variations of money supply, most economists tend to focus on M1 and M2. The former takes into account cash and coins in circulation, as well as demand deposits in checking accounts and traveler's checks. In other words, money that's either in your hand or can be accessed very easily.
Meanwhile, M2 accounts for everything in M1 and adds savings accounts, money market funds, and certificates of deposit (CDs) below $100,000. It's money you have access to, but it takes a little extra effort to put this capital to work. It's M2 money supply that's raising eyebrows on Wall Street and making history. READ MORE...
