Category: Daily Instagraph

7.32% is the fixed interest rate paid on average in the US for a new 30 year mortgage loan. This is not only a decade high but prohibitive for homebuyers who will think at least twice before locking in a mortgage for 3 decades. While most mortgages are of shorter duration, we can not imagine … Continued

The 10 biggest stocks by market capitalization currently represent 31.7% of the S&P 500, the biggest concentration of the US stock market in 30 years. Is this really justified by fundamentals? We believe not as earnings only represent 21.5% of the profits generated by the companies in the S&P 500. This is a rather average … Continued

The oil price is hovering around 73 USD, a level 45% below the post pandemic highs reached in Summer last year. Remember that US strategic petroleum reserves are at a 40 year low and recent stronger economic data coming out of the US diminishing concerns of a severe US recession. From that perspective it is … Continued

Yesterday the 2-year US Treasury yield briefly shot above 5%, creating turbulence in the bond and the equity markets. 2 reasons: 1/ stronger-than- expected job data in the US and 2/ the Dallas Fed governor voicing concerns that inflation was still too hot and further tightening was needed. We are less concerned as bond yield … Continued

Bankruptcies are currently rising in the US. This appears understandable given the rising cost of financing due to higher rates putting the weakest, overleveraged companies over the edge. What is however a surprising is that the credit spreads in the high yield space are not increasing. To us, this is another sign that investors are … Continued

Once you exclude the 7 biggest Megacap Tech Stocks in the S&P 500, the forward Price-to-earnings of the S&P 500 falls from 18.8 to 16.4 times. This is still expensive compared to history but by far less extreme than the S&P 500 as a whole. To put matters in perspective, the European stock market trades … Continued

Since the financial crisis in 2008, US companies have managed to constantly increase their competitiveness against the businesses located in other developed countries. Return on equity for the MSCI US is currently 5.5% higher than the one for MSCI AC World ex US. There are many reasons for this, one being that the US index … Continued

Sector valuations for the S&P 500 speak a clear language. InfoTech is currently at a 40% premium valuation in terms of PER compared to the S&P 500. Compared to the 30 years history this is a rare event: on average the premium was less than 20% and such an extreme valuation as today happened less … Continued

Over the last weeks we have seen a whole series of economic data coming out of the US that has been surprising economists positively. This week we had again strong US housing, consumer and durable goods data. At the same time economic surprises lack in Europe. Result: the current divergence between the surprise indices of … Continued

We can not recall having seen the performance of the US equity market so concentrated on only a few names. The top 15 companies in the S&P 500 are up 34% while the median company in the S&P 500 is only up 1%. In Europe the situation is less extreme but still. Instead of spending … Continued