[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]  Martin Pelletier [@MPelletierCIO](/creator/twitter/MPelletierCIO) on x 61.7K followers Created: 2025-07-24 19:48:42 UTC M2 vs. S&P XXX Why Are M2 and the S&P XXX Correlated? Liquidity Drives Risk Appetite: When M2 rises, it often reflects more cash in the system — from Fed easing, bank lending, or fiscal stimulus. This excess liquidity tends to flow into financial assets, including equities, driving up the S&P XXX. Low Rates and Easy Money Boost Valuations: Rising M2 is often associated with low interest rates, which reduce discount rates and inflate equity valuations. Investors also search for yield, rotating from cash and bonds into stocks. Wealth Effect Feedback Loop: Rising equity markets increase household wealth, which can boost spending and deposits, indirectly supporting M2 growth. This creates a feedback loop: more liquidity → higher equities → more deposits → more liquidity. Causality: Does M2 Drive the S&P, or Vice Versa? Primarily, M2 drives the S&P 500, especially during: QE cycles (e.g., 2009–2014, 2020–2021) Crisis responses (e.g., COVID stimulus). However, the S&P can also influence M2 indirectly: Through capital gains that increase deposits via confidence effects that spur lending and investment.  XXXXX engagements  **Related Topics** [money](/topic/money) [stocks](/topic/stocks) [lending](/topic/lending) [fed](/topic/fed) [rating agency](/topic/rating-agency) [$spy](/topic/$spy) [Post Link](https://x.com/MPelletierCIO/status/1948470413455229394)
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Martin Pelletier @MPelletierCIO on x 61.7K followers
Created: 2025-07-24 19:48:42 UTC
M2 vs. S&P XXX Why Are M2 and the S&P XXX Correlated?
Liquidity Drives Risk Appetite: When M2 rises, it often reflects more cash in the system — from Fed easing, bank lending, or fiscal stimulus. This excess liquidity tends to flow into financial assets, including equities, driving up the S&P XXX.
Low Rates and Easy Money Boost Valuations: Rising M2 is often associated with low interest rates, which reduce discount rates and inflate equity valuations. Investors also search for yield, rotating from cash and bonds into stocks.
Wealth Effect Feedback Loop: Rising equity markets increase household wealth, which can boost spending and deposits, indirectly supporting M2 growth. This creates a feedback loop: more liquidity → higher equities → more deposits → more liquidity.
Causality: Does M2 Drive the S&P, or Vice Versa?
Primarily, M2 drives the S&P 500, especially during: QE cycles (e.g., 2009–2014, 2020–2021) Crisis responses (e.g., COVID stimulus). However, the S&P can also influence M2 indirectly: Through capital gains that increase deposits via confidence effects that spur lending and investment.
XXXXX engagements
