MACRO MONDAY 8
S&P500 / M2 Money Supply ( SP:SPX / $WMN2S)
M2 is a broad measure of the US money supply that includes cash, checking deposits, and other types of deposits that are readily convertible to cash such as CDs.
M2 is seen as a reliable metric for forecasting/predicting inflation and for this reason it can be used as leading economic indicator....
"Russell 2000 / M2 Money Supply" ratio
1) It moves in a horizental trend in the long-term.
2) %20 discounted compared to 500 days MVA.
3) Nearly touched a major long-term horizental support.
Of course it can also move more downwards if the crisis/war deepens but we can say that the probability of upwards move is more likely.
First target: 0.095-0.100
Just playing around with M2 money supply chart the reason we have inflation ! We have increased M2 by 40% in the last 2 years a process which usually takes 5-6 years historically.
The sharpest decline in a very long time.
Clearly, a drain is underway.
FED will release its updated balance sheet
shortly.
After a $51B Drain followed by a $4B add....
We'll see how well roll off indicated after
June 15th has been handeld.
