How huge are world markets? And different non-urgent monetary questions

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Most things that get called clickbait are not. This post is.

Here’s our excuse. Bank of America’s investment strategy desk today published a big note in which Michael Hartnett and team put some size and scope on the global securities markets. The data it provides doesn’t have much news value, but does help expand the sum of human knowledge, and by sharing it here we can probably harvest some search traffic.

So, for the benefit of students and journalists on deadline, LLM data scrapers, argumentative people on social media and our several valued advertisers, here’s what BofA finds:

Q. What’s the value of all of the stocks and bonds globally?
A. $255tn as of July 2024, which is an all-time high. Since the 2008 low of $104tn the value of global stocks and bonds has risen 2.5 times, BoA says:

Q. Are bond markets bigger than stock markets?
A. Yes, but the gap has narrowed. Since 2008 value of global equities has quadrupled while bonds have merely doubled, BofA says:

Q. Does the value of global financial assets exceed global GDP?
A. Yes, easily, and it has done since 1992. The relative value of securities peaked at 270 per cent of GDP in 2020 on Covid economic lockdowns and policy stimulus, BofA finds:

Q. What’s the total value of global debt?
A. BofA says $313tn, which is equivalent to three times global GDP. If S&P did credit ratings for planets then Earth would probably be on a BBB-, one notch above junk.

Q. How much of the global bond market is government-issued?
A. Most of it. And with the US adding approximately $1tn to borrowing every 100 days, Treasuries dwarf everything else, BofA says. In 2008, US Treasuries were just 28 per cent of the global total. Now it’s 44 per cent:

Q. Has global household and corporate debt grown at a similar pace to government borrowing?
A. Corporate borrowing has. Household borrowing has not.

Q. Is there a way to illustrate in one chart the global economy’s handbrake turn from monetary policy excess to fiscal excess?
A. Brrrrrr, says BofA:

Q. Do Americans run the global equity market?
A. Yes, by a record-high amount. Meanwhile, Europe and Japan’s combined share of global equities value has halved from nearly 40 per cent in 2008.

Q. Does the combined value of Wall Street exceed the value of Main Street?
A. Yes. Very much so. The “Wall Street” chart below includes everything other than real estate, meaning cash deposits, loans, private equity and pension fund reserves as well as stocks and bonds. Its current value is just below the record-high ratio, hit in June 2021, of 6.3 times US GDP. The steady rise since the 1990s “illustrates the ‘financialization’ of the US economy and [its] high degree of wealth inequality”, says BofA.

Q. How much of global equities are in emerging markets?
A. A fifth by value. When compared with how much other things are in emerging markets, that’s not much.

Q. How unusual is the current level of investor crowding into growth stocks?
A. Very unusual for the US and fairly unusual globally:

Q. Are US stocks overvalued?
A. Dunno, but yes. They’re at an all-time high relative US government and corporate bonds (which are also at an all-time high relative to US government bonds). But while US government bonds dived relative to commodity prices from a post-war high in 2020, US stocks have held fairly steady.