The current environment reflects two past cycles: the transformational tech excitement of the late 90s (Internet then, AI now) and the unequal economy of the mid-2000s, where growth was supported by a massive new investment force (Emerging Markets then, AI now). This dual narrative provides a framework for understanding today's market dynamics.
After hitting 30-year lows in early 2024 (adjusted for economic size), global M&A activity has surged 64% year-over-year. This dramatic turnaround in corporate aggression, combined with rising AI-driven capital expenditure, strongly mirrors the late-stage cycle dynamics of 1997-98 and 2005-06, suggesting the expansion is not over.
Beyond more obvious metrics, a significant but less-discussed trend of financial deregulation is underway, mirroring similar environments in 1997-98 and 2005-06. Changes to Basel endgame, Solvency II, and various savings reforms are creating a deregulatory path that supports the current market cycle, a factor many investors may overlook.