Sizing Up The Bullish Zeitgeist

Below are some of the most interesting articles and charts I came across this week.

Not only have markets become increasingly concentrated, but so have the portfolios of investors of all ages.

At Vanguard, one-fifth of investors 85 or older have nearly all their money in stocks, up from 16% in 2012.

"The spirit of the times is 'Don't worry about the markets crashing. They will come back up and set new highs.'" -@RobertJShiller https://t.co/7pWRniVbji
— Jesse Felder (@jessefelder) July 5, 2023

Corporate earnings don’t appear to support the case for either.

Earnings contribution of the top ten stocks in $SPY has collapsed while their % of market capitalization has rocketed past all-time highs. Gonna be a great time for stock pickers as this unwinds . . . again. https://t.co/RRU9cH9vfM
— Chris Pavese (@ChrisPavese) July 6, 2023

But that certainly hasn’t held back investor enthusiasm for Big Tech.

Tech Stocks have the highest relative sentiment in 23 years. pic.twitter.com/ofObJpMNmJ
— Macro Charts (@MacroCharts) July 1, 2023

Meanwhile, the message from the yield curve is hardly bullish.

This chart shows 100 years of Chair Powell's preferred US yield curve (10yr-3m rates). Whatever your view about the accuracy of the yield curve as a recession predictor, the curve has only been this inverted three times before - 1929, 1973 and 1979-80. None of those ended well. pic.twitter.com/BKy8y33yV2
— Ian Harnett (@IanRHarnett) July 5, 2023

And if that message is eventually vindicated, there are certain assets, where sentiment is significantly depressed, that may stand to benefit.

'The Gold/Silver ratio is considered most useful at its extremes. Currently the ratio is near 82, which possibly indicates that silver is undervalued relative to gold.' https://t.co/WdfrZ0keoE ht @SoberLook pic.twitter.com/dBBjqIMSVf
— Jesse Felder (@jessefelder) July 6, 2023

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