Research Summary

The report provides a comprehensive analysis of various economic and market trends. It highlights the broadening of the rally in the market, with significant improvements in consumer sentiment data. The report also points out the pronounced debasement of the dollar since the inception of the Federal Reserve. It discusses the high concentration of a few companies in the NASDAQ 100 and S&P 500, and the disconnect between earnings and equity performance. The report also mentions the surge in US and UK company insolvencies, the potential structural resilience of services inflation due to tight labor markets globally, and the speculative flows becoming euphoric in single stock options.

Actionable Insights

  • Monitor revenue and earnings trends: Earnings downgrades are picking up pace as we kick-off earnings season, suggesting less optimism among analysts and a lower bar for “beats” vs expectations.
  • Watch for risk-off events in the market: Peaks in 2-year note yields are often followed by risk-off events in the market. A clear peak in 2-year note yields would suggest cuts are being priced in, likely due to problems within the financial system and/or economy.
  • Consider the potential of emerging economies: The global distribution of wealth heavily leans towards the west, particularly the United States. However, Asia is emerging, and economies like India have significant potential over the coming decades.
  • Be aware of the potential for inflated deals: Some consumers have seen signs of items that were not actually marked down, but advertised as such, particularly during events like Amazon Prime Day.

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