S&P 500 / M2 Ratio

S&P 500 index divided by M2 money supply (billions). Measures equity market valuation relative to the monetary base — how much stock market value exists per unit of money in the system. When the Fed expands M2 rapidly (QE, pandemic stimulus), this ratio declines even as the market rises in nominal terms. Compression signals equity gains are money-supply-driven rather than productivity-driven; expansion to new highs implies genuine re-rating.

This indicator is computed by MacroLab from two FRED series: SP500 divided by M2SL. Both input series are sourced from the Federal Reserve Economic Data (FRED) database.