What if It's Still Early? | TCAF 244 — Key Takeaways
The S&P 493 is only ~4 months into an earnings recovery that historically mirrors the 3-year earnings contraction that preceded it, making broad-market earnings expansion the most underappreciated bull case right now.
Key takeaways
Early innings of a broad earnings recovery most investors are missing
Early innings of a broad earnings recovery most investors are missing
- Equal-weighted S&P earnings were contractionary for 3 years — the recovery is only ~4 months old, per Chisholm.
- X-Mag7 stocks are up 10.25% YTD vs Mag7's 6.6%, confirming the rotation is already underway.
Current CapEx cycle is nowhere near 2000 bubble levels by one key metric
Current CapEx cycle is nowhere near 2000 bubble levels by one key metric
- In 2000, corporate America spent 3.5–4x free cash flow on CapEx. Today the aggregate ratio is still under 1x.
- All 11 GICS sectors are accelerating CapEx relative to sales — but none at bubble-era magnitudes.
High uncertainty historically predicts higher — not lower — equity returns
High uncertainty historically predicts higher — not lower — equity returns
- Quartiling uncertainty levels: the more uncertain the environment, the higher the historical odds of stock market advance and capital spending.
- Selling in 1978 to avoid two recessions and 15% rates, then buying back in late 1982, still cost you 40% in cumulative nominal returns.
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In this video
- 1mPre-show banter: octopus facts and restaurant check frustrations
- 3mAnthropic Series H funding announcement
- 6mSponsor: Franklin Templeton municipal bonds
- 7mGuest introduction: Denise Chisholm, Fidelity
- 9mGoldman Sachs S&P 8000 target and the AI-driven CapEx cycle
- 18mPersistent market fear, valuation compression, and climbing the wall of worry
- 25mTech sector valuation convergence and the semiconductor surge
- 37mMicron, memory stocks, and bubble comparisons to 2000
- 45mEarnings diffusion: the S&P 493 and equal-weight recovery
- 52mInflation, Fed policy, oil shocks, and the 10-year yield
- 58mUpcoming IPO wave: SpaceX, OpenAI, Anthropic and market absorption
- 1h 3mSpeculative activity, meme stocks, and high-beta tech
- 1h 5mKey takeaways summary and closing
“the median technology stock, their earnings peaked in 1996. Right. That was the disconnect.”
— Denise Chisholm
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