Strong corporate profit margins may make the S&P 500 better value than traditional P/E ratios suggest, despite elevated stock prices. Per Bloomberg, its P/E-to-profitability ratio is at its lowest in nearly 14 years, last seen around 2012. Wall Street might be overlooking something important. x.com 

S&P 500 earnings are keeping pace with prices, so this does not look like a bubble. Quarterly earnings are on track to grow 29.5%, more than twice the 10-year average of 12.6%, while the 18.7 forward P/E is just below its 19.1 decade average. x.com 

The S&P 500's elevated P/E masks concentration in just a few stocks, making index exposure less appealing than selective stock picking for risk and reward. Its P/E is well above the ten-year median; digging into individual constituents looks more sensible than buying all 500. x.com 

Hyperscaler credit stress and weak financials-versus-staples leadership warn of downside risk in the S&P 500 consolidation. Spreads have broken July wides, though an upside breakout is probable if financials stabilize. So far, tech weakness has lowered yields as Fed hikes are priced out, letting defensives rally and the S&P chop. If the Fed signals Nasdaq weakness won't stop tightening without better data, the tech-yield link could break in an uncomfortable, 2018-like direction. x.com  x.com  … Show more

Broader participation, earnings growth and lower multiples support US equities into year-end, with seasonality also favorable. The equal-weight S&P rose 1.95% this week while the cap-weighted index slipped 0.05%; EPS is up 38% so far and multiples are down 17% year to date. The 10-year yield fell 41 basis points. x.com 

The S&P 500 rally is a concentration bet because earnings growth is coming from very few companies, while AI productivity gains are not spreading across the broader economy. Nvidia and Micron drive 34% of expected Q3 earnings growth, and ten companies account for two-thirds. Apollo's revenue-per-worker chart shows gains for the Magnificent Seven but little for the other 493 S&P 500 companies; most stocks that reflect the broader economy are down. x.com  x.com  x.com 

The S&P 500 has convexity if earnings keep growing while the 10-year yield eventually falls from 5.3% back toward 4-4.5%. The index is near record highs yet getting cheaper relative to expected growth, because earnings are rising faster than prices. Treasury yields above 5% have compressed the multiples investors pay for future growth, while the AI capex cycle expands the earnings base; those two enormous forces are pushing against each other. x.com 

The S&P 500 bull market is only about halfway through by historical standards, because fundamentals are not cracking. The 44-month run is up 92% from the October 2022 low against a 184% average bull-market return. 84% of companies beat Q1 estimates, operating margins are at record highs, and AI capex drives 40% of index earnings growth. The run ends when earnings disappoint, and the latest quarter shows no sign of that. x.com 

The S&P 500's top 30 stocks cost three times as much per dollar of free cash flow as the other 470, despite their stronger margins. Their net margins are 34% versus 17%, but they trade at 5.6x sales and a 1% free-cash-flow yield excluding stock compensation, against 2.3x and 3% for the rest. Half of an index-fund investment rides on those 30 stocks at the richest multiples in modern history. x.com 

Improving breadth and GPUs massively outrunning depreciation costs put US-equity risk/reward heavily in bulls' favour. Some 59% of S&P 500 stocks are above their 50-day average; the Nasdaq 100 is positive over five trading days, and small caps bounced off their 200-day average. Buy gradually, as the selloff may not be completely over. x.com