🚨 In case you missed it...
JPMorgan cracked nearly 5% yesterday after the bank told investors that it will spend billions of dollars more in expenses ...
In case you missed it...
Alphabet $GOOGL and Nvidia $NVDA are now the only 2 Magnificent 7 stocks that are outperforming the S&P 500 this year Source: Barchart
Consumer confidence down, stock market up
A K-shaped economy captured in one chart. (via Bianco Research thru HolgerZ)
When the Fed cuts interest rates within 2% of stock market all-time highs, the S&P 500 has gone on to finish higher over the next 12 months 20 out of 20 times (100% hit rate) 🚨🚨🚨
Note however that the market reaction in the 3 to 6 months is mixed Source: Carson, Barchart
U.S. Equity Risk Premium is now negative 🚨
On a risk-adjusted basis, stocks offer zero return for investors 👀 Source: Bloomberg, Barchart
Great chart from Ryan Detrick thru Eugene Ng on X
The top 10 stocks account for ~39% of the US stock market. But many more countries are far higher, China ~49%, Australia 62%, Taiwan 76%, and even Singapore is ~88%.
Will Santa be coming to town this year? 🎅
The last five trading days of the year plus the first two trading days of the new year are known as the "Santa Claus rally". Since 1980, there have been positive returns 73% of the time, with average S&P 500 upside of 1.1%. Source: Edward Jones thru Markets & Mayhem
🛑 WAKE UP CALL: Could the AI Trade trigger a 15-20% S&P 500 correction? (Goldman Sachs Analysis)
It's not about the current earnings—it's about the Capex future. And if that future changes, the market is in for a shock. Goldman Sachs just dropped a massive warning. The Core Risk: AI Spending Reversal They say that our current S&P 500 valuation is priced for an incredible, long-term AI Capex boom (spending on AI infrastructure). What if that boom stalls? If AI capex growth expectations revert to early 2023 levels, GS estimates the S&P 500 valuation multiple could see a 15-20% DOWNSIDE. That's a huge potential correction driven only by multiple compression. The Extreme Scenario (The Nightmare Fuel) -> Imagine the Hyperscalers slamming the brakes on spending. 🔴 The expected Capex for 2026 is approximately $433 billion. A reversion to the 2022 Capex level of $158 billion would result in a massive reduction of $275 billion—the "Lost Capex." 🔴This $275 billion shortfall represents a 30% reduction to the consensus estimate of $1 trillion in S&P 500 sales growth. Consequently, the expected S&P 500 revenue growth rate would drop sharply from the consensus of 6% to approximately 4%. ➡️ Ultimately, this decrease in spending would pose a substantial downside risk to both the AI investment trade and the broader S&P 500 market. The Takeaway for investors: This isn't about today's P&L. It's about the market's perception of tomorrow's AI-driven growth. A dramatic cut in capex would signal the long-term AI earnings thesis is broken, leading to a much steeper decline in stock valuations than a simple revenue reduction would suggest. 🔑 Don't miss this point: Near-term revenues might only drop modestly, but the hit to long-term earnings growth expectations will crush valuations. Source: Goldman Sachs, Neil Sethi @neilksethi
