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- "The valuation premium of the largest US companies has narrowed"
"The valuation premium of the largest US companies has narrowed"
DC Lite #721
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1. DXY. The US Dollar Index has risen sharply over the past week and enters the weekend at its highest since Apr'25.
2. Drawdowns. In the five prior episodes since 2011 where SMH was down 25%+ and XLK 15%+ from their 52-week highs, SPY was already in a double-digit drawdown every time. Today it's down just 3%.
3. Top 5 vs. bottom 495. "The valuation premium of the largest US companies has narrowed.. tightest in almost 10 years"
4. EPS growth. With 91% of the index reported, the S&P 500's blended YoY growth rate for Q3 is 31.9%, which would mark the 3rd straight quarter of +25% growth and the 8th consecutive quarter of double-digit growth.
5. Earnings vs. valuation. "One question is whether we have finally reached peak earnings growth. It's starting to look that way. The n12m earnings estimate is up 39% from a year ago but is starting to look toppy against an expected growth rate of 19% over the next 12 months. The base effect is kicking in."
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