Mark Mobius, a renowned investor, has raised concerns about a potential risk to the U.S. markets stemming from a decline in the M2 money supply. He believes this could lead to a decrease in capital available for discretionary spending, potentially impacting the ongoing economic expansion and bull market. However, he remains optimistic about certain tech sectors, particularly semiconductors, due to growing global demand and the rise of AI.
The contraction in the M2 money supply, which had helped curb inflation, has come to an end. This reversal raises concerns that inflation may remain elevated for longer than anticipated. Although the increase in M2 is not excessive, the positive trend in recent months suggests that the battle against inflation is not yet over. The rise in M2 is timely, providing lubrication for an economy that was starting to show signs of tightening. However, it also highlights the delicate balance between curbing inflation and supporting economic growth.
