Stock markets are showing potential for new all-time highs, with the US leading and Europe possibly following. Despite strong performance in EU luxury sectors and US market caps, companies like Tesla face challenges. Investors exercise caution with the Nasdaq-100/M2 ratio exceeding 80% and the US 10-year yield rising above 4%.
New ATHs
Stock markets consolidated in January. The enduring momentum persists; fresh ATHs possible. The US signaled this recently. Europe, slightly behind, may normalize soon.
Results are in: EU luxuries, US market cap records. Momentum is undeniable. Nevertheless, news was not all good news for many companies (TSLA..).
Yellow Flag is up
Deflating Nasdaq-100 with M2 (FED Money Supply Index), we surpass 80%, signaling a cautionary stance for equities. The S&P Volatility Index is still around 13.40, back to 2019 levels. No warning from there.
US Rates
The US 10-year yield surpasses 4%, affirming overly rapid market rate cut expectations (refer to the EOY 23 market wrap).
Taking small profits here…