Market Divergences

You’ve heard the saying, “Don’t invest in the fund, own the asset manager.” By the same logic: don’t bother owning the stocks, own the exchange. Nearly every major exchange has outperformed its domestic equity market over the past 20 years. (Horizon Kinetics)

Consumer staples are significantly underperforming the market due to factors like Ozempic and tech dominance, marking the worst disparity since the dotcom era.(@JeffWeniger)

A nuisance for active fundamental managers is that the underperformance of high-quality S&P 500 stocks is now the most extreme since 1999. (@JeffWeniger)

Software companies that are AI adjacent are significantly outperforming those that are not, with the latter experiencing losses this year. (Meritech)

Excluding the top quartile, the software market is trading below its historical average. (Meritech)

Software companies now prioritize efficiency over growth, as evidenced by slowed growth and increased FCF margin since 2022. (Meritech)

All the excitement around data centers has pushed copper to all time highs. (John Authers)

Dr. Copper is not sniffing out the weakness that lumber is. Lowest level in a year for lumber futures, likely being driven by a slow housing construction market. (@conorsen)

And companies aren’t concerned about the economy. Mentions of “Economic slowdown” on earnings calls is at its lowest point since 2007. (Bloomberg)

Healthcare premiums have quadrupled in the past 25 years. When does this reach a breaking point? (Apollo)

Korean stocks have been a home run this year. (Daily Shot)