Bank of Japan owns ~80% of the country's ETFs and 7% of the entire Japanese stock market, according to Morningstar and the Tokyo Stock Exchange data.
Moreover, the BoJ holds ~55% of the Japanese government bonds. Huge distortions 👇 Source: Global Markets Investor
On average with the 4-year cycle... the next few months are sideways at best...
Source: Grant Hawkridge
An important observation on the Mag 7 / AI names: Relative EPS hasn't rolled like stock prices have
Bottom-line: Equity portfolios should be more diversified but there is no reason to panic on big Tech at this stage. It is a highly crowded trade and valuations are lofty. But fundamentals stay strong. Source: TME, RBC, GS
Has the Magnificent 7's earnings growth peaked?
In Q2 2024, the Magnificent 7' net income, excluding Nvidia, $NVDA, rose by 30% year-over-year, the slowest growth since Q2 2023. This is down from 51% in Q1 2024 and below the record 57% seen in Q4 2023. It is estimated that the growth rate will decelerate further to ~17% in Q3 2024. Source: The Kobeissi Letter
The cost to hedge a 10% drop in the S&P 500 $SPY is hovering at roughly its highest point since October 2023
Source: Bloomberg, Barchart
The view from Apollo: Still no signs of a recession in the US
Source: Apollo
An important development for portfolio construction: bonds and equities are negatively correlated again.
Source: Bloomberg, Alessio Urban
Japanese stocks are trading at a reasonably low PE of 13.17 after the recent drawdown
Source: Bloomberg, Markets & Mayhem
