10k Words | February 2025
Apparently, Confucius did not say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in ads on the sides of streetcars...
The AI theme is taking up greater share of S&P 500 market cap than previous growth “bubbles” while fund managers’ cash holdings are at 15-year lows. US valuations have left Europe in the dust but sustainable high growth is scarce; and there is healthy debate over whether US valuations stack up (and on Morningstar’s numbers Australian stocks are more overvalued than US peers). It is reporting season in Australia and the final week of February will be big. Be careful what you take away from it though - it seems CEO sentiment is not a reliable indicator. Meanwhile, US consumers are showing some distress in the form of credit cards 90+ days in arrears. There has been an uptick in non-performing personal loans and home mortgages as a % of bank assets in Australia too. With coffee bean prices surging, meanwhile, it is good to know the bean is only ~11.5% of the price of a cup of coffee.
Market cap as % of S&P 500 for “market leadership” themes
Source: Bank of America Global Research
Fund Manager Survey cash level (% of Assets Under Management)
Source: Bank of America Global Research
European market PE multiple at record discount to US
Source: Bloomberg via @BobEUnlimited
Growth in market cap of the Nasdaq Composite - historical & forecast
Source: UBS
Three-year compound annual sales growth rates for US companies, 1962-2024
Source: Morgan Stanley
Morningstar’s bottom-up fair value estimate of the US market
Source: Morningstar
Morningstar’s bottom-up fair value estimate of the Australian market
Source: Morningstar
No. of ASX-listed companies reporting each week of February reporting season
Source: Coppo Report
S&P/ASX Small Ordinaries weighting (% of index) reporting each week of February
Source: Coppo Report
CEOs bad at market timing
Source: Goldman Saches, @BrianFeroldi
US consumer credit: percent of balance 90+ days delinquent by loan type
Source: New York Fed
Australian banks’ non-performing assets - as % of assets by type
Source: RBA
Historical price of Coffee (Arabica)
Source: Financial Times
Cost composition of a cup of coffee
Source: Pablo & Rusty’s