Utilities Destroying Mag 7 in 2024?
Utilities $XLU +27% Amazon $AMZN +21% QQQ +16% Microsoft $MSFT +15% Apple $AAPL +13% Google $GOOGL +13% Tesla $TSLA -9% Source: Lawrence McDonald @Convertbond, Bloomberg
🚨IS THIS THE BIGGEST CONCENTRATION BUBBLE IN HISTORY?🚨
Magnificent 7 stocks now account for ~32% of the S&P 500, near the all-time high. This share has increased by 10 percentage points in just 1.5 years. This is even 10 percentage pts HIGHER than in the 2000 DOT-COM BUBBLE. Source: LSEG Datastream, Global Markets Investor
The current drawdowns across the Magnificent Seven:
• $AAPL Apple: 5.0% • $META Meta: 5.2% • $AMZN Amazon: 11.9% • $MSFT Microsoft: 12.3% • $GOOGL Alphabet: 17.7% • $NVDA Nvidia: 20.3% • $TSLA Tesla: 48.6% Source: Koyfin
BREAKING: Magnificent 7 stocks have now erased $550 BILLION of market cap today.
Nvidia, $NVDA, is on track for its largest daily drop since April 2024. As discussed during our H2 outlook, volatility is coming back with a vengeance ahead ahead of US elections. Source: The Kobeissi Letter, Bloomberg
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
As the Mag 7 slow the rest of the SP500 is showing signs of improving growth
Source: Bloomberg intelligence, Markets & Mayhem
This chart suggests that liquidity from the yen carrytrade has flowed into the Mag7
Source: Bloomberg, HolgerZ
