Three powerful forces are supporting the bull market today
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, but also some sentiment signals as Wall Street consensus narratives become self-reinforcing.
(yes it is a sentiment signal)
3.This Indicator called the 3 major market peaks over the past 3 decades, and has just sounded the alarm once again.
Margin debt acceleration has reached warning levels.
4.Here’s how the S&P500 has traded on average before and after market peaks since 1930.
The bearish takeaway is how quickly and significantly things can turn, but the bullish/optimists perspective is that things eventually get back on track + great opportunities are uncovered.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
