Over a third of the S&P 500 is now concentrated in the "Magnificent Seven" stocks, up from a fifth of the index two years ago.
Source: Charlie Bilello
Earnings do matter
Source: Investment Strategy Group, Bloomberg, S&P Global
SP500 companies’ revenue per worker.
Source: Eugene Ng on X, BofA
Since 1950, the S&P 500 has had an average intra-year drawdown of -13.6% but is still up 11.6% per year annualized.
No Risk, no Reward. Source: Peter Mallouk @PeterMallouk
Shocking stat of the day: The market cap of the SP500’s top 5 stocks is now equal to the size of the bottom 407 stocks.
Apple, $AAPL, Nvidia, $NVDA, Microsoft, $MSFT, Google, $GOOGL, and Amazon, $AMZN are worth now a combined $15.3 trillion. These companies have added $5 TRILLION in market value since the beginning of last year. To put this into perspective, these 5 stocks are worth now nearly as much as China and Hong Kong's stock markets COMBINED. The top 5 companies reflect a record 24% of the entire US stock market cap. Source: Compound, The Kobeissi Letter
Actual S&P 500 earnings growth has exceeded expectations during the last few years.
Will it be the case again this quarter? Source: The Market Ear, Factset
BREAKING: The difference between the S&P 500’s earnings yield and BBB-rated corporate bond yield has dropped to -1.9%, the lowest in 15 years.
Excluding a brief period in 2009, this is the lowest level in 23 years. The gap has fallen by 4 percentage points over the last 5 years as US interest rates have risen sharply. In other words, less risky investment-grade corporate bonds now pay a higher yield than S&P 500 companies' profits relative to their stock prices. This metric suggests the market may be overvalued. Can this gap continue to widen? Source: Bloomberg, The Kobeissi Letter
Breadth matters. And what we currently see on us equities does not look healthy.
Here is a visual of the % of stocks outperforming the S&P500: ALL TIME LOWS. In other words, concentration risk measured in this way beats 2000 lows. Source: Samantha LaDuc on X, GS
