S&P 500 profit margins spiked to 16.9% in Q2, which is by far their highest level in history.
“Profit margins are probably the most mean-reverting series in finance, and if profit margins don't mean revert, then something has gone badly wrong with capitalism. If high profits don't attract competition, there's something wrong with the system.” - Jeremy Grantham Source: Charlie Bilello @charliebilello
Berkshire Hathaway's massive cash pile declined for the first time in 4 years, meaning it was finally a net buyer of stocks.
Source: Barchart @Barchart
One of the biggest surprise of 2026 is the COLLAPSE of volatility
We have a war in the Middle East, a volatile oil price, a new Fed Chair and mid-term elections ahead. And yet the VIX, a measure of implied volatility in the S&P 500, has fallen to the lowest level since January. Even implied bond-market volatility is nearly 30% below the 5-yr average. So why are markets so resilient? - AI concerns are easing: Strong Big Tech earnings, accelerating cloud growth and expanding backlogs are increasing confidence that AI investment can generate attractive returns. Markets are becoming more selective, rewarding companies with clear monetization. - Earnings are booming and broadening: Q2 S&P 500 earnings growth is tracking around 48%, versus 24% expected initially. Strength is increasingly spreading beyond mega-cap technology. - The economy remains resilient: Manufacturing has accelerated to its strongest level in more than four years, supported by improving demand, production and industrial activity. - Macro risks are fading: Lower oil prices reduce inflation concerns, while a cooling labor market and slower wage growth have lowered expectations for further Fed tightening. - Record highs are not necessarily a warning: Historically, new highs have often been followed by strong medium- and long-term returns. Source: Liz Abramowicz, Bloomberg
The US Department of Defense is putting pressure on the country's defense industry to speed up the production and delivery of weapons.
The call comes amid a domestic debate over the US weapons arsenal, following reports that the war in Iran has led to the country's stockpile of air defense missiles shrinking too quickly. Source: Sweden Herald
The Growing Concentration of Wealth in America
The country’s 400 wealthiest people saw their share of the US’s total wealth shoot up by 146% over the past 30 years, while that of the entire bottom half of the American population declined by 25% over the same period. Source: FT Trevor Noren
Still hard to believe that just 6.5 years ago, the S&P 500 traded for less than 1/3rd its current price...
CAGR since 2020 lows: +20% $SPX $SPY Source: Trend Spider
An important observation from Goldman which points out that half The S&P's "record" earnings growth is just "Big Tech" marking up its own stock portfolio.
Here it is, verbatim, from the desk of Goldman's Ioannis Blekos: "S&P 500 EPS growth is tracking at 26% year/year excluding the 'other income' from mega-cap tech's appreciating equity investments. Including those gains, the headline growth rate is 45%." i.e the "record" earnings season you have been told about - the one holding up the most expensive equity market in history - is running at 45% only if you count the gains that Nvidia, and its brethren, book when the stock portfolios they sit on go up. Strip out the mark-to-market of Big Tech valuing its own venture bets, and the number nearly halves, to 26%. Source: GS, zerohedge
The U.S. has added $450 billion to the national debt since July 1st.
That’s over $15 billion a day. “There are two ways to enslave a country. One is by the sword. The other is by debt.” – John Adams Source: Peter Mallouk @PeterMallouk
