DC Lite #365

In partnership with

1. US credit rating. Moody’s downgraded the US’ last remaining Aaa credit rating by one notch to Aa1, citing persistently large fiscal deficits and rising debt affordability concerns. The agency expects the deficit to grow from 6.4% of GDP in 2024 to nearly 9% by 2035. It revised the outlook from negative to stable.

2. Worry Windows. "Many investors are worried about weakness in eco and EPS data in the months ahead. Some folks are calling for a return to the lows. The period between a market low and ongoing EPS concern is the 'worry window'. The thing about windows is that you can look through them."

3. US vs. RoW. "Kind of surprised that even with this huge rally, and tech having done so well, that US stocks have still underperformed global peers since April 2. I wouldn't have guessed it."

4. EM vs. DM earnings. "Earnings momentum is weaker in DM than in EM."

5. Cyclicals vs. Defensives. "Even after downward revisions to growth forecasts, cyclicals are expected to continue to outpace defensives’ growth in 2025 ... Cyclical sectors are now expected to open up an average 892 bps earnings lead on an average 266 bps revenue advantage in 2025."

ICYMI