Category: Daily Instagraph

Market concentration in the S&P 500 has reached extreme levels. Today, the top 10 companies account for around 35–40% of the index — close to record highs in modern history. While this is far below the “broad diversification” that many investors expect from an index fund, it means performance is increasingly driven by a handful … Continued

The combined market capitalization of all German listed companies now stands at 3 trillion USD — almost a third below Nvidia’s 4.3 trillion USD. At ECP, we believe in US exceptionalism, the AI revolution, and Nvidia’s unique positioning as its prime beneficiary. Trading at 31x forward earnings, with consensus expectations of 39% annual EPS growth … Continued

In terms of price-to-earnings, European equities today trade at a slight discount compared to where they stood 10 years ago. Importantly, in Europe valuations are not driven by a handful of mega-caps but are more evenly distributed across the market. The US picture looks radically different. Not only do American equities trade at a significant … Continued

Over the past 20 years, the global weight of the US economy has declined from 19% to 15% of world GDP. Yet, during the same period, the weight of US equities in global indices has surged from 51% to 67%. European Union’s share of world GDP also fell, from 21% to 14%, now slightly below … Continued

Something unusual is happening in European bond markets: French 10-year yields are now trading at the same level as Italian ones. Traditionally, investors demanded a clear premium to hold Italian debt, but this gap has disappeared. The reasons are twofold. France is struggling with political fragmentation, rising deficits, and repeated leadership changes. Italy, on the … Continued

For the first time since 1996, foreign central banks now hold more gold than U.S. Treasuries. This is not only a story about gold — it reflects waning confidence in U.S. sovereign debt. The U.S. faces persistent twin deficits (budget and current account), rising debt levels, and questions about long-term fiscal discipline. While the de-dollarization … Continued

There are now more equity ETFs listed in the US than listed US companies. ETFs seem to have become a very profitable business for Wall Street, despite their low fees, and often go beyond simply replicating the market. At ECP, we see ETFs as useful tools for building diversified portfolios. But we also believe that … Continued

What are the biggest tail risks keeping fund managers awake at night? According to the latest BofA Global Fund Manager Survey, it is not equity market valuations, nor the fear of an AI bubble. It is not even the risk of an imminent recession. The number one concern today is a second wave of inflation … Continued

As the saying goes: “You only know if it was a bubble once it bursts.” Looking at NVIDIA today versus Cisco during the Internet bubble highlights the difference between multiple expansion and earnings growth. Cisco’s share price in 2000 surged far ahead of earnings that never materialized, leading to a painful collapse. NVIDIA, by contrast, … Continued

As we have repeated many times, US equity market valuations remain stretched — both compared to their own history and versus the rest of the world. For now, investors seem comfortable with this premium as earnings growth of US companies, particularly in technology, continues to deliver. US exceptionalism and the AI revolution remain the driving … Continued