"Although we forecast that major DM central banks (aside from Japan) are ﬁnished hiking, our baseline forecast implies little incentive for them to cut interest rates in the near term," Goldman Sachs foreshadows, with Raymond James charting the cooling of core US inflation to levels still higher than seen for many years. Our favourite chart this month has Apollo showing that the market is almost always wrong about what the Fed will do next. Apollo backs up with a graphic on "weak demand". SMBC NIkko gives us a view on the relationship between inflation and valuation. Tech stocks are at record highs relative to the broader market as Bank of America charts, while Goldman shows the impact on market valuations. Equitable Investors looks at movement in the EV/EBITDA multiple on tech stocks relative to bond yields. We get another take on the surge in index concentration from Bespoke - and small v large via Bank of America. Deutsche Bank reckons AI didn't drive markets. Finally we get stuck into VC, where Crunchbase data shows significantly less unicorns being born and funding remaining subdued, with the Refinitiv Venture Capital Index remaining well of its highs despite recent gains.
Goldman Sachs' policy rate forecasts for developed markets
Source: Goldman Sachs
Core US CPI
Source: Raymond James
The market is almost always wrong about what the Fed will do
Mentions of "weak demand" during S&P 500 earnings calls
Earnings multiples mapped against inflation
Source: SMBC NIkko via Bloomberg
Tech sector at all-time high vs S&P 500
Source: Bank of America
Price-to-Earnings multiples by market - tech sector elevates US multiples
Source: Goldman Sachs
US 10 year bond yield (top) mapped against US tech sector (QQQ ETF - bottom)
Source: Koyfin, Equitable Investors
S&P 500 stocks from smallest to largest - 10 years ago v today
US small caps histoically cheap vs large caps (Forward PE of Russell 2000 v Russell 1000)
Source: Bank of America
Difference between abnormal returns for semiconductor and software firms, 20 day moving average
Source: Deutsche Bank
Emerging unicorns by the year founded
Global venture funding (US dollar volume)
Refinitiv Venture Capital Index
Source: Financial Times
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