How to analyze stocks
the 6-step framework inspired by Peter Lynch. Source: Compounding Quality
Many investors bet Germany’s “whatever it takes” fiscal stimulus package and an enormous uplift in European defence spending would drive a prolonged upturn in the region’s equity markets.
A BofA survey of fund managers showed allocations to Eurozone stocks leapt to their highest level since 2021 at the beginning of this year. But the outperformance was short lived. Strong earnings from the US mega caps have sent Wall Street stocks powering ahead again, despite Trump’s tariff onslaught and deteriorating US economic data. Weak second-quarter earnings in Europe have supported the growing view that the region’s stock rally is losing momentum. With more than half of the companies in the Stoxx Europe 600 having reported earnings, the index is on track for no earnings growth compared with a year ago, according to Bank of America, sapping optimism over a revival in the region’s equity markets. By contrast, the S&P 500 index’s constituents are on track to post 9 per cent year-on-year average earnings growth, according to BofA, powered largely by strong results from Silicon Valley’s tech giants and Wall Street banks. Source: Financial Times, LSEG
So much for the end of US exceptionalism...
US equity market cap as a percentage of the developed world total rose for a third month to 72.5% at the end of July, while Europe's weight declined to 16.1%. Source: Augur Infinity
S&P Equal Weight has outperformed S&P Cap Weight during easing cycles
Source: Jefferies thru RBC
Nvidia & Microsoft alone account for almost half of sp500 $SPX returns this year
Source: Tatiana Darie, MLIV, Bloomberg thru Joumanna Bercetche
The S&P 493 – that’s the S&P 500 excl “Magnificent 7” – is expected to deliver just 2-3% net income growth in Q2, Q3, and Q4.
That’s slower than inflation, meaning most of the market is barely growing in real terms. Measured against this, US equities are quite expensive! Source: Strategas thru HolgerZ
US companies announced share repurchases totaling $166 billion last month, the highest dollar value on record for July ...
For the year, announced buybacks stand at $926 billion, which is $108 billion ahead of the previous year-to-date record set in 2022. Source: Bloomberg, Birinyi Associates, RBC
“Insiders at just 151 S&P 500 companies bought their own stocks last month, the fewest since at least 2018, according to data compiled by the Washington Service.”
Source: Kevin Gordon on X, Bloomberg
