1/2 Over the last 25 years, the S&P 500 has traded in a band of 10x – 23x forward earnings. Valuations have ebbed and flowed with investor confidence in the global financial system, economic/earnings growth, and human ingenuity...

1/2 US Big Tech stocks have gone from being 20.0% of the S&P 500 at the end of 2022 to 35.9% today. Almost half of that increase (47%) is due to NVDA, and about a quarter (24%) comes from GOOG & AMZN...

As much as corporate headcount reductions are in the news of late, it is important to remember that the US labor market has seen an average of 1.6 million layoffs every month since 2022. Yes, every single month.

Wall Street analysts are increasing their 2026 earnings growth expectations for the S&P 500. These positive revisions are not just related to Tech, with 5 other groups also seeing stronger expected growth rates. This is unusual (analysts usually cut forward estimates over time) and bullish.

Q3 financial reporting season continues to impress, even with the occasional company-specific stumble. S&P 500 earnings growth is running +10%, with further upside revisions likely.

The Min Vol strategy is badly lagging its goal of capturing 70 – 80 pct of any upside gains in US stocks, thus far only generating 6 – 30 pct of the S&P’s 16.3 pct YTD price return.

Momentum has gone from dramatically outperforming the S&P 500 in Q1 (-2.3% vs. -4.6%) and Q2 (+18.9% vs. +8.1%) to underperforming in Q3 (+6.7% vs. +7.8%) and October (-0.8% vs. +2.3%).

Growth stocks have been the place to be YTD in both large caps (+22.9% vs. +9.4%) and small caps (+14.9% vs. +7.9%).

After notable rallies in Q1 (+2 – +3%) and Q2 (+6 – 7%), both developed and emerging market currencies lost value versus the dollar in Q3 (-1%) and in October (-1 – -2%).

Every major developed economy currency declined versus the dollar last month, by an average of -1.8 pct. This move occurred against a backdrop of lower interest rates, with 2- and 10-year Treasury yields down 2 and 7 basis points to 3.38 pct and 4.08 pct, respectively.

#Bitcoin was down in October (-4.1%), once again underperforming both gold and global/US equities.

Silver has modestly outperformed gold (+65.0% vs. +52.0%) YTD.

Even though all have contributed to the S&P’s YTD price gain of 16.3%, only 3 Big Tech stocks have outperformed thus far in 2025: NVDA (+50.8%), GOOG (+48.0%), and MSFT (+22.8%). The other 4 are lagging: TSLA (+13.1%), AMZN (+11.3%), META (+10.7%), and AAPL (+8.0%).

In the aggregate, Big Tech was responsible for 90% of the S&P’s price return last month. These 7 stocks are now 35.5% of the S&P 500.

Thanks to its October rally, Tech is now solidly outperforming every other group YTD (+29.3 pct, next best group – Communications - +18.6 pct).

Only Technology and Health Care outperformed last month, +6.7 pct and +3.7 pct, respectively. Tech is, of course, a major leadership group while Health Care is finally playing some catch up after being extremely oversold.

Only 3 US Big Tech names are now outperforming for the year: NVDA (+50.8%), GOOG (+48.0%), and MSFT (+22.8%).

Year to date, US Big Tech is responsible for 56 pct of the S&P’s gains, even though only NVDA, GOOG, and MSFT have outperformed.

New work by the St Louis Fed shows that US economic expansions often see months where payroll numbers decline, a useful lesson for whenever we start seeing Jobs Reports again.

"As DataTrek co-founder Nicholas Colas pointed out this week, the benchmark index's worst-performing stocks so far are a hodgepodge of names from the consumer, industrial, and services industries, including $LULU, $DOW, and $TTD." @yahoofinance.com finance.yahoo.com/news/the-sto...

US households currently have $4.5 trillion deposited in checking accounts, 4x their 2019 levels. Most (+90 pct) of this cash is held by the top half of the wealth distribution.

The longer you own any broad market index fund, the less you care about its current holdings. Over the long run, returns come from ecosystems of growth and innovation, not individual companies.

Have we already seen the highs for the year in the S&P 500? History says no. Watch our latest video with @downtownjoshbrown.bsky.social on @thecompoundnews.bsky.social below! www.youtube.com/watch?v=GLu_...

1/3 The debate between Growth and Value equity investment styles has raged for +50 years. Most retail investors prefer Value, but not in the traditional sense. The S&P 500 Growth and Value indexes share some of that ambiguity...

1/2 @SpaceX reached 2 major milestones this past weekend. It has now delivered over 10,000 satellites into low-Earth Orbit for its internet service @Starlink, and its most used Falcon 9 booster launched for the 31st time...

1/2 US large cap Utilities, up +19.7% YTD, are beating the S&P 500 (+14.5%) and even the Nasdaq Comp (+18.9%). This is not solely due to lower interest rates; Utilities have just outperformed Consumer Staples by +3 standard deviations...

DataTrek's Nick Colas: "We expect this will continue through the rest of the year as markets reassess U.S. economic growth and, therefore, future Fed monetary policy." @barrons.com www.barrons.com/articles/bon...

While counterintuitive, economic expansions often see periods of declining oil prices. Such is the case now, with the price of WTI 20 pct lower than a year ago.

1/2 US large cap Tech stocks have outperformed the S&P 500 by +10.4 percentage points over the last 100 trading days, over 1 standard deviation above the long-run mean...

DataTrek's Nick Colas: "The S&P 500 continues to trade on expectations for strong earnings growth over the next two years." @marketwatch.com www.marketwatch.com/story/magnif...

The S&P 500’s worst performing 20 stocks YTD are a hodgepodge of consumer (Lululemon, Deckers, Constellation), industrial (Dow, Lyondell, Eastman Chemical), and services names (FactSet, Fiserv, Accenture). Tax loss selling may pressure them further in the weeks to come.

If historical patterns hold, we haven’t seen the highs for the year just yet. My friends Jessica Rabe and Nick Colas came by today for a look at the stock market opportunity from here. youtu.be/GLu_RhhEHhI?... @datatrekresearch.bsky.social

On the latest episode of What Did We Learn with @downtownjoshbrown.bsky.social, DataTrek co-founders Nick Colas and Jessica Rabe discussed Q3 earnings season, the seasonality of S&P highs, and Big Tech valuations/cash flows. Watch below! www.youtube.com/watch?v=GLu_...

1/2 The S&P 500 continues to trade on expectations for strong earnings growth over the next 2 years. Over the last 5 years, the index has averaged a 20x forward 12-month price/earnings multiple...

US high yield corporate bond spreads reflect continued confidence in the US economy.

A lack of economic data and the ongoing US government shutdown are nudging Fed Funds Futures into putting small (1 – 5 pct) odds on a 50 bp rate cut at either the October or December FOMC meetings.

Thus far, Q3 earnings season is not as strong as Q1 or Q2. While more companies are beating than usual, the amounts of those beats are lower than average.

Computing power is so much higher than in 1999 that the difference is almost unimaginable. It would take roughly 8 million Intel Pentium chips – the state of the art for personal computing in 1999 – to deliver the same computational ability as one Nvidia Blackwell chip today.

1/2 US Big Tech companies are currently generating approximately $700 bn/year in operating cash flow, or just over $100/person/year for every adult on the planet. Their competitive positions are such that this number will likely remain constant for years to come...

Thankfully, the US Energy Information Administration is still hard at work. The bad news is that their weekly US gas demand data shows declines of -1.9/-3.2 pct over the last 1/4 weeks versus a year ago. The US consumer is still quite cautious, deferring discretionary spending.

1/2 US Google search volumes for “find job” and “new job” are at new 20-year highs. Queries for “full/part time job” are also significantly higher than at any point over the last 2 decades...

1/2 Price action in #bitcoin remains largely decoupled from gold, US Tech stocks (the QQQ ETF) & US stocks (S&P 500). Its average 30-day correlations to each since Feb 2024 are 0.12, 0.39 & 0.38, respectively. These equate to r-squares of 1.4 – 15.2%...

Polymarket odds for an end to the US government shutdown cluster around either October month end (20 percent) or not until after November 16th (31 pct).

1/2 Determining whether to over or underweight US Big Tech is now a more important decision for global investment managers than the traditional questions regarding country and developed/emerging market allocations...

While it may feel more conservative to cast the broader net of the S&P 1500, the difference to the S&P 500 is negligible in most ways that matter. This is largely a function of a highly concentrated US equity market, something we don’t see changing in the coming years.

US Big Tech (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, Tesla + Broadcom) accounts for almost a quarter of the MSCI All Country World Index. It’s nearly 5x the weighting of the second largest country in the index (Japan, 4.8 pct weighting) after the US (64.4 pct).

1/2 Using a run rate based on last year’s results, Microsoft generates net cash flows equal to Pfizer’s entire equity market value, buys a PayPal in CapEx, and returns capital equivalent to the value of a Delta annually...

The difference between 2- and 10-year Treasury yields stands at 0.55 percentage points just now, consistent with past periods of continued US economic expansion.

1/2 Wall Street analysts have high earnings/revenue growth expectations for calendar Q3/2025/2026 for US Big Tech + AVGO, and a lot better than the S&P 500 as a whole. These 8 names have high bars to meet on the top and bottom lines, leaving less room for upside surprises...

As important as OpenAI is to US public equity markets, we don’t even know which accounting firm is auditing the company. Microsoft’s involvement means the books are almost certainly clean, but it would be nice to know the name of the auditor nonetheless.