TLDR: SPX upside is nil.
Markets are like elastic bands.
They can diverge from fundamental anchors for years, and the relationships that bind them to other aspects of the economy can stretch many standard deviations.
But eventually, something happens and these elastic bands snap back.
What you see above is two cases of this situation. A market that is ebullient thanks to 7 stocks, has been able to post strong performance - ignoring the drivers influencing other facets of the markets.
The first chart above shows that SPX should be 30% down this year, based on the weakness observed in the job market.
The second chart shows that SPX should be 30% down form here, based on a target P/E of 14x - which would be more in sync with the bond market than the current 20x P/E.
Does that mean impending doom? No, but it means we need to be careful about catalysts because the long-term skew of SPX returns is clearly to the downside.
So as we said often in this storied publication, them 5y Treasuries looks very appetizing.
This section is powered by Open AI connected to TOGGLE AI
Apple's stock has been on a rapid decline, shedding nearly $200 billion in market value within just a span of two days.
This sharp drop is attributed to China's intentions to prohibit the use of iPhones at not only government-affiliated entities but also state-owned companies. This development is particularly timely, coinciding with the launch of Huawei Technologies' cutting-edge 5G-enabled smartphone and the Huawei Pro leveraging the capabilities of Semiconductor Manufacturing International Corp, China's largest chip manufacturer.
Notably, this move aligns with a broader nationwide effort to counteract U.S. attempts to ascend in the Chinese market. If this ban remains in effect, it could have repercussions for various other American tech firms that heavily rely on sales and production within China.
At present, analysis from TOGGLE suggests that Apple's stock typically rebounds following such significant downward shifts, leaving investors to ponder the attractive opportunity for an entry point for investment.
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