On a growth-adjusted basis, the mega caps trade at the largest discount to the median S&P 500 stock in over six years
Source: TME, Goldman Sachs
Asset class and style returns by JP Morgan
As bonds and stocks fell simultaneously, commodities were the notable outperformer in Q3, returning 4.7% and echoing the market dynamics of 2022. Source: JP Morgan
We have seen one of the fastest drops in equity positioning since early 2022. Time to think about the upside pain trade?
Source: TME, DB
The S&P’s price has diverged from the trend for EPS estimates recently
The rise in bond yields probably explains this dichotomy
Last time global stocks had a longest streak of losses than the one we're in currently was 12 years ago
Source: Bloomberg, David Ingles
Is the golden era of 60/40s coming to an end?
And if equities / bonds correlation stay positive, which asset classes should be added to portfolios? hard assets and commodities? alternatives (private debt, private equities, etc.)? cash on an opportunistic basis? Source chart: Tavi Costa, Bloomberg
Last month returns for the sp500 constituents in one chart
Source: Trading View
While mega-caps tech stocks are recording huge returns on their cash pile thanks to the rise of interest rates, this is not the case for the rest of the market
Small cap companies are paying the most interest expense ever recorded and unfortunately their interest income is not keeping pace. This will become an even larger problem when small companies are forced to refinance at significantly higher rates. Source: FT, barchart
