The past year has seen a long list of "XYZ is at its highest level since XXX" announcements.
Some notable examples:
NASDAQ
tech stocks are back to 1999 levels
The
number of initial public offereings, including companies with no earnings,
is back to 1999 levels
Junk
bond yields are even lower than in 2007
Junk
bond issuance is higher than in 2007
Margin
debt is back to 2007 levels
Corporate
debt is rising faster than in 2007
Stock
prices are higher than in 2007
Most recently, US mergers and acquisition activity is back to 2007 levels:
NEW YORK (MarketWatch) -- Merger Monday is now often followed by Merger Tuesday,
and investors are cheering a long-awaited resurgence in corporate mergers and
acquisitions. But is the pickup something for market bulls to celebrate, or
does it herald the end of the rally?
"You worry a little bit that M&A activity tends to pick up as the market
matures, and not in the early stages of a bull cycle," said Mitch Schlesinger,
managing director at FBB Capital Partners in Bethesda, Md.
The pickup doesn't necessarily signal the end of the recovery or of the
bull market, but "you do want to put it in the context of a fairly slower-growth
environment where people are either buying growth, or they are consolidating
industries because of slow growth," he said, in a phone interview.
Topping $1 trillion
There have been 5,844 targeted U.S. M&A transactions in the year-to-date
valued at $1.04 trillion (see chart above), according to Dealogic. This marks
the first year deal volume has topped $1 trillion over that period since
2007. Volume over the same stretch last year totaled $597.8 billion.
Big-time first-half deals include AT&T's agreement to purchase satellite-television
provider DirecTV and Medtronic's pact to purchase fellow medical-equipment
maker Covidien for $43 billion.
While surging M&A activity can belie nervousness over the growth environment,
it also reflects diminishing unease over potential economic and political
pitfalls.
"Everyone we talk to is looking forward, not behind. We're two more years
beyond the '08-'09 recession. Not that people have forgotten about it, but
they're more concerned about growth targets than they are about another [round
of] financial instability," said Robert Rubino, head of corporate finance
and capital markets at RBS Citizens in Boston, in a phone interview.
Some of the links included here are to articles that, like MarketWatch on
M&A, take a cautious approach to such records. But the vast bulk of the
reporting in the mainstream media is positive, celebrating the new records
as a sign of economic progress without asking the obvious question: "If we're
at 1999 or 2007 levels, what subsequently happened back then?" In each and
every case noted here, the answer is "chaos." Overstretched markets and excessive
debt led to crises that nearly crippled the global financial system.
This time the milestones are a combination of 1999 and 2007, which
implies a more-broad-based financial bubble than occurred in either of those
previous periods.
At the risk of repeating the same tired complaint, if the media's job is to
sense patterns and give today's news some historical context, you'd think the
tone of most reporting would be, rather than "Yippee, we're growing," "Ooops,
here we go again."
