Unprecedented U.S. Money Supply Trend Signals Major Stock Market Shift

The M2 money supply in the US has experienced a significant decline, a rare occurrence not seen since the Great Depression, which historically foreshadows economic trouble. While predicting stock market movements in the short term is challenging, historical data suggests that a contraction in M2 money supply has been associated with periods of depression and high unemployment. However, long-term investors are reminded that economic cycles, including recessions, are normal and have historically been followed by periods of growth. Despite the potential impact on corporate earnings, the long-term resilience of the US economy and stock market suggests that a historic decline in M2 money supply should not be a cause for concern for investors with a long-term horizon.