Volatility Pulse - Concentration Conundrum
The Big get Bigger
The AI Big 10 (the Magnificent 7 plus Broadcom, AMD and Micron) now make up 41% of US market cap, the same peak share tech, media and telecom hit around 2000. Japan topped out at 44% and the railroads at 63%.
Source: BofA via @GlobalMktObserv
Microsoft and GE would like a word
Nvidia and Apple now make up 15.0% of the S&P 500. At the 1999 peak, the top two (Microsoft and General Electric) added up to 9.0%, and Exxon plus Apple were 8.5% in 2011.
Source: Baird Strategas via The Kobeissi Letter
The average stock didn't get the memo
The equal-weight S&P 500 now trades at 1.11 times the regular cap-weighted index, down from about 1.60 in 2015. The typical stock has been losing ground to the giants for more than a decade.
Source: Investing.com via The Kobeissi Letter
Bad breadth has been weirdly good?
Since 2023, every time fewer than half of S&P 500 stocks sat above their 200-day average, the index was higher six months later: 19 for 19, averaging 13.9%. It happened again on September 18.
Source: @itmrandy
Weak wages, strong stocks?
Since 1959, when the Fed was hiking while wage growth sat in its weakest tenth, the S&P 500 averaged 11.4% over the next 12 months. When wages were running above median, it averaged 5.6%, and today sits in that weakest bucket.
Source: Fidelity via @_JoshSchafer
Say you're scared, buy the risky stuff
Consumer expectations sit near their lowest since the financial crisis, yet cyclical stocks trade near their strongest level against defensive stocks since the late 1990s. People say one thing and their portfolios say another.
Source: The Leuthold Group
Memory stocks, on the clearance rack
Memory stocks like Micron and SK Hynix trade at about 4 times their earnings two years out, half their median of 8x since 2012. In 2023 the same group traded near 14.5x.
Source: Goldman Sachs via Mike Zaccardi
The hyperscalers got cheaper
Amazon, Alphabet, Meta, Microsoft and Oracle trade at about 22 times forward earnings, near their lowest in a decade and down from about 38x in 2020. The gap to the median S&P 500 stock has narrowed to roughly 4 points.
Source: Goldman Sachs via Mike Zaccardi
Move over, railroads
AI infrastructure spending is estimated at 3.63% of US GDP a year from 2025 to 2032. The railroad build-out ran at 2.24%, the interstate highways at 1.13% and the telecom and fiber boom at 1.1%.
Source: Stijn Van Nieuwerburgh via Nick Timiraos
Worth more than every tech IPO since 1980
SpaceX, Anthropic and OpenAI are valued at a combined $5.2 trillion, $1.1 trillion more than all 3,365 US tech IPOs from 1980 to 2025 put together. The IPO total is in nominal dollars, and Anthropic's figure is the valuation investors expect at its coming IPO.
Source: Coatue
The fastest markdown in tech history?
The price of AI has fallen roughly 12.7x a year since 2021, a several-hundred-thousand-fold drop in about five years. DNA sequencing needed more than a decade to get that cheap, and computing about 35 years.
Source: Epoch AI via Stock Savvy Shay
Hormuz is open for business
About 13.5 million barrels a day of oil are moving out through the Strait of Hormuz on a seven-day average, up from roughly 2 million in April. That is still below the 20 million-plus that flowed in February.
Source: Rory Johnston (Commodity Context)
Just Because...
Emperor Penguins: 85% Cheat
March of the Penguins sold us a lie. Only about 15% of emperor penguin pairs reunite the next breeding season; the rest find someone new. Find the closest viable partner, raise the egg, survive Antarctica. Romance is a warm-weather luxury.
