Recently, the US stock market has been hitting historical highs, and the reasons behind it are quite direct yet subtle. I think it can be understood from two core points: economy and Liquidity.

Let's talk about the economy first. The United States has not yet entered a recession, and the overall situation is quite stable. Corporate profits are good, and consumer demand remains active, which has provided a solid foundation for the stock market. In other words, the rise in U.S. stocks is not just due to high market enthusiasm; the economic fundamentals can truly support it.

Looking at liquidity again, this is the key to driving asset prices. The broad money supply M2 continues to reach new highs, and market funds are very ample. Although there was a brief period of monetary tightening before, it quickly rebounded and has already exceeded levels during the pandemic. Additionally, the U.S. government adds about $1 trillion in debt every 100 days, which is equivalent to continuously injecting "hot money" into the market. This flood of funds not only pushes up the stock market but also leads gold and Bitcoin to take turns reaching historical highs. Investors switch back and forth between high-risk assets and safe-haven assets, and the market is very sensitive to liquidity.

How will the stock market move in the future? The core still depends on two things: whether the economy is in recession and the direction of monetary policy. If the economy continues to grow, and M2 and government debt continue to increase, the U.S. stock market looks like it can continue to rise in the short term. However, if there is an economic recession or policy tightening, the stock market may come under pressure.

The brief monetary tightening has almost negligible impact on the long-term trend. The rapid rebound of M2 indicates that the overall monetary policy remains relatively loose, which supports risk assets. However, we must not be complacent as debt and Liquidity continue to increase, accumulating potential inflationary pressures and financial bubble risks. Investors should remain vigilant and pay attention to changes in policy and economic data.