To The Moon

Lower effective tax rates have quietly become one of the biggest drivers of S&P 500 earnings growth, helping U.S. equities maintain a structural advantage over international markets. At the same time, earnings forecasts are surging, investor optimism is accelerating, and margin debt is once again approaching levels historically associated with major market peaks. 1.The effective tax rate of S&P500 $S&P 500(.SPX)$ companies has been a tailwind for earnings growth as it has consistently fallen over the years. It's also a competitive advantage that US stocks have over their global peers as EM + DM ex-US effective tax rates remain materially higher. 2.Long-Term earnings growth estimates have Exploded 💥 🚀 There's likely some truth in here,

Our composite Valuation indicator is at similar levels seen just before the 1987 Stockmarket Crash. Does that mean the market is about to crash? 👀 🤔 Maybe, but back then there were catalysts --you can't look only at valuations, you need the bigger picture. $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2609(ESmain)$ This is a sign of the times. Because we’re in a raging bull market with an almost frantic sense of greed, we saw record trading in leveraged-long US equity ETFs during the latest market dip. We saw this type of thing in late-2021 too, and it looked like smart money for a moment there...

Bubble Case Study 🫧 🧐 Yahoo presents a sort of case study in stock bubbles, and you see this type of pattern over and over again. Lessons for Bulls: trees don't grow to the sky, there is such a thing as a bad price for a good company, things can turn quicker than you expect. Lessons for Bears: it can take a long time to be right, things can run further and faster than you expect, respect the price action.

This week’s chart is one for the bulls. It shows the MSCI ACWI (All Countries World Index) aka Global Equities in the black line, and 50-day moving average breadth in the red (i.e. what percentage of countries are trading above their 50-day moving average). Breadth indicators like this tell you a couple of things. First, they give you an early heads up on global developments as the impact spreads across countries. Second, for a shorter moving average timeframe like 50-days, it operates as an oscillator. In other words, it gives you overbought/oversold signals. In traditional market analysis a true overbought signal is when an oscillator like this goes to an extreme high —and then rolls over. That second part is key. The reason is you can get an overbought market that stays overbought and g

1.SPXEW vs $NASDAQ 100(NDX)$ The equal-weighted S&P500 $S&P 500(.SPX)$ is pushing higher, and the Nasdaq 100 is stuck in consolidation mode (as tech is in a bit of a stalemate; awaiting cue on next steps). Basically, the bullish rotation theme remains in play [i.e. the rest of the market is finally having its day in the sun as tech takes a back seat]. 2.Global Tech vs US Tech Similarly, the chart below shows how rest-of-world tech continues to push higher (new highs last week), while US tech pretty much looks to be in a downtrend at this point. The divergence here and above still has a bullish/constructive hue to it in that you have the rest of the market + global looking good, doing well in absolu

1. Market Cap Weight As noted above, defensives’ market cap weight reached an all-time low last year, since then they have ticked up as tech has ticked down off record highs. Again, this tells us about the state of the market cycle (note where previous extremes were, and how fleeting they ended up being — and how they ultimately resolved). But it also tells us important investment strategy takeaways such as how passive index investors are now heavily exposed to tech and on the contrary, also have historically low exposure to the diversifying and risk-dampening attributes of defensives. So this is a timely prompt to consider both the big picture macro-market outlook, but also the pragmatic implications for portfolio strategy (e.g. is this the right sector mix for equity exposure? should you

$NASDAQ(.IXIC)$ $Invesco QQQ(QQQ)$ $E-mini Nasdaq 100 - main 2603(NQmain)$ $NASDAQ 100(NDX)$ Probably the most Unthinkable chart you can imagine... US tech stocks have peaked and are losing ground vs global tech stocks. Surely the US is not about to lose its Global Tech Leadership status?? But these things do go in cycles, even if you have big conviction on the very real fundamental story, you can't ignore macro-market-financial cycles, and the cycle is looking quite tenuous... The big issue is Tech Stocks have peaked, are on technically shaky ground ---AND this is coming from a starting point of stretched Valuations.

Tech Sector Credit Risk! 👀 It was all fun and games with AI hype when it was just equity markets, but now that credit markets are involved it doesn't seem so fun anymore… $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $E-mini Nasdaq 100 - main 2603(NQmain)$ Higher for Longer risk... It seems like in lieu of a deflationary recession the path of least resistance for bond yields is higher (for longer). If that happens slowly and smoothly then it's probably no issue. But there are some risks if the path becomes more violent sharp... Emerging Markets risk pricing sentiment. Confidence vs Complacency?

With all I discussed above I couldn’t keep this one to myself! This chart tracks the average z-score (i.e. normalizing each series in terms of where it is tracking vs long-term average so it can be put in common comparable terms) across every country that has consumer and business confidence surveys. In other words, it is a global barometer of economic confidence. The first thing to note is how out there in the real world, consumers and businesses have been having a tough time in recent years — while there was no official recession, with the inflation shock, rise in rates, and exhausting (geo)political news/noise flow, we’ve basically been through a confidence recession [albeit others call it a k-shaped economy, stealth recession, vibecession, etc!]. And now, as I noted earlier, the clouds

Learnings and conclusions from this week’s charts: 1. The S&P500 $S&P 500(.SPX)$ equal vs cap weight ratio is at an inflection point. 2. Investor cash allocations are at cycle lows. 3. (equity allocations are at cycle highs) 4. Global vs US equities are also at an inflection point. 5. Despite some overheating in EM equities, there’s room to run. Overall, while last week saw some particularly turbulent price action within tech (especially software slumping as a result of AI disruption/threats), we’ve seen further progress on bullish rotation and bull market broadening. And in case I didn’t make myself clear, Rotation is the big theme right now…