Changes in the cost of capital remain front and centre with Japan's dividend yield surpassing the rest of the world's for the first time in 50 years and asset class yields converging as fund managers express bullishnes on bonds, with 30+ countries facing inverted yield curves and the futures market still pricing a decline in the Fed Funds rate. It is amazing how even having the ticker "AI" has been enough to attract buyers. Amidst such sentiment, Nvidia has joined the trillion dollar market cap club - being in the sector that has diverged from bonds of late. Such mega caps are living in a different world from small businesses facing into tighter lending. We look at the S&P 500's trends relative to interest rates and "QE" and how large cap growth has been above other market segments over the past decade. There's still not much joy in IPO markets - especially for those who didn't sell quickly. Finally, we take a look at the decline of cash in the Australian economy and the resurgence of commercial aircraft orders.
Japanese dividend yield exceeds the rest of the world for first time in 50 years
Source: Minack Advisors, Asian Century Stocks
Compression of yields across assets
Source: Financial Times
Fund Managers' bullish bonds, negative equities, relative to historical levels (June 2023 survey)
Source: Bank of America, [email protected]
33 countries have an inverted yield curves
Market expectations for Fed Funds Rate (as per futures)
Recent surge in price of C3.ai (Ticker "AI")
Stock code "ZOOM" took off when Zoom Video Communications (ZM) surged in 2020
Nvidia joins "Trillion Dollar" Market Cap Club
Divergence between tech valuations & bond yields
Source: Bloomberg, Koyfin
Loan availability compared to three months ago
Source: NFIB Small Business Economic Trends May 2023
Fed tightening, EPS growth & PE multiple expansion/contraction
S&P 500 performance and Federal Reserve net Quantitative Easing (QE)
US equities - growth v value over the past 10 years
Source: Equitable Investors, Koyfin
Recent US IPOs
ASX IPOs in CY2023
Sharp decline of cash's share of Australian payments
Net orders for commercial aircraft
Source: The Economist
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