Working Money vs Stock Market
Updated
M2 is the money in circulation issued by the government.
(fred.stlouisfed.org/series/M2SL)
M2REAL is the real value of M2 deflated by the CPIAUCSL (Consumer Price Index for All Urban Consumers).
(fred.stlouisfed.org/series/M2REAL/)
(fred.stlouisfed.org/series/CPIAUCSL)
M2REAL is in an infinite uptrend, with a downward correction now.
The correlation with SPX is positive as both are falling.
A change in correlation, either up or down, could indicate a move in SPX.
Scenarios:
1. M2REAL falling, SPX falling: positive correlation
2. M2REAL rising, SPX rising: positive correlation
3. M2REAL falling, SPX rising: negative correlation
4. M2REAL rising, SPX falling: negative correlation
With money more scarce and expensive due to inflation, I believe more in scenario 1.
After this inflationary crisis is over, maybe scenarios 2 and 4.
(fred.stlouisfed.org/series/M2SL)
M2REAL is the real value of M2 deflated by the CPIAUCSL (Consumer Price Index for All Urban Consumers).
(fred.stlouisfed.org/series/M2REAL/)
(fred.stlouisfed.org/series/CPIAUCSL)
M2REAL is in an infinite uptrend, with a downward correction now.
The correlation with SPX is positive as both are falling.
A change in correlation, either up or down, could indicate a move in SPX.
Scenarios:
1. M2REAL falling, SPX falling: positive correlation
2. M2REAL rising, SPX rising: positive correlation
3. M2REAL falling, SPX rising: negative correlation
4. M2REAL rising, SPX falling: negative correlation
With money more scarce and expensive due to inflation, I believe more in scenario 1.
After this inflationary crisis is over, maybe scenarios 2 and 4.
Comment
Dividing SPX by M2REAL, waiting to see if it breaks the low of the week.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.