Nobody can predict at the moment how the Middle East situation will unfold, but if history is a guide market impacts of geopolitical scares are usually short lived
Will it be different this time? Source: Michel A.Arouet
The bull-market is one-year old and the leadership has been unusual
• Since 1980, every single end to a bear market and start of a new bull has been accompanied by a broad rally in stocks, with the Equal Weight Index and small-caps stocks outperforming the S&P 500. • This time is different: the S&P 500 is heavily influenced by the 10 largest companies, which have enjoyed outsized returns. The so-called "magnificent seven" (Amazon, Apple, Alphabet, Meta, Microsoft, NVIDIA and Tesla) are up 77% over the past 12 months. But the S&P 500 Equal Weight Index, which assigns the same weight to all the stocks that are included, is up a more modest 11% for the same timeframe. Small-cap stocks are up 5%. Source: Edward Jones
Cash + Treasury Bills now account for 15% of BoA's Global Wealth AUM, the highest level since the onset of the pandemic and one of the highest levels since the GFC
This could potentially limit the downside risk if that capital rotates back into stocks. Source: Barchart, BofA
For the first time in the last 5 decades, rising interest rates have failed to cause Stock P/E multiples to contract
Source: Barchart
Two different years
Two different reactions by growth stocks. Source: J-C Parets
stocks vs bonds
Source: Brian Feroldi
Yes, Hedge funds are short equities
But don't forget the bigger picture: positioning among asset managers and leveraged funds is rather long... Source: TME, JP Morgan
$100k invested in the S&P 500 ETF 30 years ago would be worth over $1.7 million today
Was the road to 17x growth a straight line? Far from it... Source: Charlie Bilello
