Over the past two decades, China has experienced five major stock market rallies, three of which were driven by economic stimulus measures. As illustrated in the chart below, these rallies were particularly brutal, with gains ranging from 50% to 100%.

The question arises: are we witnessing a similar phenomenon?

The global money supply has surged significantly over the past two months. After a period of relative stability since the beginning of 2023, around $4 trillion has been injected since August, 1. This figure does not include the additional trillion in liquidity that China plans to add in the coming months.

This expansion of the global money supply explains (to some extent) the recent surge in gold prices and the rally in stock markets, which are at all-time highs.

Two weeks ago, the Federal Reserve cut interest rates by 50 basis points for the first time since March 2020. However, unlike previous cycles where markets reacted strongly after a rate cut, this time, investors anticipated the decision by accumulating U.S. stocks well before the official announcement. This anticipation had the effect of increasing stock valuations even before the rate cut had any impact on the economy.

In other words, although rate cuts have traditionally boosted stock markets, the current already high valuations might limit the extent of the stock market's rise this time around.

According to Apollo, over 40% of U.S. small and mid-cap companies are reporting losses, a level comparable to that seen during the Great Financial Crisis of 2009. The only time this proportion was higher was in 2020 and 2021. Additionally, companies in the Russell 2000 index are accumulating a debt of $832 billion.

Further rate cuts could allow these “zombie” companies, which are unable to generate profits, to stay alive thanks to more favourable credit conditions. With a positive effect on the relative performance of small and mid-caps versus the S&P 500?

In 2008, federal debt stood at $9.4 trillion, while U.S. GDP reached $14.7 trillion, resulting in a debt-to-GDP ratio of 64%. Today, public debt has reached $35.7 trillion, with an additional $345 billion in debt accumulated between September 27 and October 1, while U.S. GDP stands at $29 trillion, pushing the debt-to-GDP ratio to 122%. What is the pain threshold for the bond market?

Since its IPO in October 1999, BlackRock's shares have generated an average annual return of 20.7%, far outpacing the S&P 500 and Nasdaq 100, which have returned 8.2% and 9.7% per year, respectively, over the same period.

BlackRock shares also outperformed giants such as Amazon and Microsoft. Apple and Nvidia, on the other hand, did even better.

In September 2024, U.S. Bitcoin ETFs bought more bitcoin than miners produced, acquiring a total of 17,941 BTC, while mining production amounted to 13,500 BTC. BlackRock's iShares ETF saw significant growth, accumulating 366,451 BTC, while Grayscale's ETF holdings dropped to 221,191 BTC, signaling a shift in investor allocation.

This growing demand underscores the increasing interest in Bitcoin ETFs, which have become a dominant force in the market. The fact that these ETFs absorbed all newly mined bitcoin, and even more, marks a shift in market dynamics that could have lasting effects on bitcoin's price and availability.