What the Money Supply is Saying About the Stock Market

The Money Supply is the fuel of the economy: watch the money supply and you will see the stock market follow

M2 Money Supply

The above chart is the M2 Money Supply—the total aggregate money in the US financial system. There is an obvious point starting in March of 2020 when the Federal Reserve began to increase the money supply in response to the COVID-19 Pandemic. Since then, the Fed has shifted to a stance of downsize the money supply in order to contain inflation. The money supply now is on a more trend-line basis of its longterm trajectory.