‘From High-Valuation Tech Stocks To Hard Assets’

Below are some of the most interesting things I came across this week.

INTERVIEW

This conversation with Wall Street legend Paul Tudor Jones is a must watch, not only for the wisdom he imparts regarding markets and trading but for that he shares about living a full life.

STAT

Much of the excitement in markets today can be traced back to earnings expectations. However, as Bill Hester writes, “Forward profit margin expectations for the 493 are strikingly disconnected from the trend of recent years.”

LINK

And, as Spencer Jakab points out, this is not always a bullish dynamic: “Deep into an economic boom, like now, sharp growth often heralded lousy performance. Some of the most rapid earnings growth outside of recoveries occurred toward the ends of major bull markets such as in July 1929, December 1973, March 2000 and early 2007.”

CHART

In fact, it may be especially problematic for the tech sector, in particular. “Though the yield curve has been steepening for some time, it is just now in a position to finally begin impacting relative EPS trends, worsening new era relative EPS,” writes Jim Paulsen.

LINK

Perhaps it’s time for the “old economy” to make a comeback. Reuters reports, “BlackRock portfolio manager Evy Hambro told Reuters capital is starting to rotate into hard assets from high-valuation tech stocks, calling it ‘the early stages of a commodity supercycle’… Unlike China’s urbanisation-driven boom in the 2000s, Hambro said demand is “much more robust and resilient” in this cycle because there is global diversification across AI, electrification and defence.”