Broken Moats
Family-Office Long/Short Research, Variant Perception
US earnings face a tough comparison problem next year, which the market usually does not receive well. This year's results are boosted by tariff refunds, a big jump in tax refunds and investment gains on stakes such as Anthropic and SpaceX. The problem likely starts in Q4, by which time an Anthropic IPO has likely happened, and weak Chinese consumption is another concern. Headwinds are stacking up together. x.comÂ
US large-cap equities still need to reprice quite a bit lower because the market wrongly assumes Trump alone controls an on/off switch for the Iran conflict. He likely would already have walked it back if he could, and Israel is unlikely to either. Zero-day options hedging and belief in a 'TACO' reversal keep equities far more complacent than commodities. Once options expiration rolls off with no change over the weekend, the repricing should follow. x.comÂ
The S&P 500 looks vulnerable as Alphabet, Meta and Amazon earnings have failed to inspire confidence after the Anthropic S-1, and November typically brings tax-loss harvesting during a weak fiscal period. Momentum indicators are weakening; be careful. x.com x.comÂ
US large-cap equities are vulnerable because earnings have not caught up with total market capitalization. The market is farther from its 200-week moving average than at any point in 18 years, and cracks are starting to show; staying bullish ignores these risks. Rate hikes remain possible, oil is still high, and yields may climb again, so now is the time for caution. x.com x.comÂ
US large-cap equities do not look like a bubble at current forward valuations. The S&P 500 forward P/E is below both its five- and ten-year averages, while tech and momentum have suffered their worst five-month decline by far. x.comÂ
US large-cap equities and the Nasdaq 100 face selling pressure as hedge funds add tech shorts while long-only funds hold back. Long-only funds may sell Magnificent Seven stocks to fund Anthropic IPO subscriptions; Iran and the midterms add uncertainty. A friend expects CTAs to sell 2.5 sigma of Nasdaq exposure, and @acemoney21 sees triggers just below the market. The Nasdaq view is expressed through QQQ puts. x.com x.comÂ
US stocks face a potentially bigger selloff as rising inflation compounds concerns about AI spending. PCE inflation reached a four-month high of 3.6%, increasing pressure on the Fed to raise rates; Alphabet shares fell after disappointing earnings, slowing ad growth and more than $51 billion of quarterly capital investment. x.comÂ
US large-cap stocks are set for a catch-up trade after the biggest, best companies fell 15% or more on a manufactured conflict that is now irrelevant, even as AI usage exploded and their numbers kept rising. The Nasdaq 100 is up only 4% this year and the S&P 500 2%, less than Claude's inflection since December alone is worth. x.com x.comÂ
Semiconductors could bounce before year-end as investors perceive valuations as cheap, Anthropic's IPO revives animal spirits and post-midterm clarity lets markets price Iran and other uncertainties. The longer-run view remains bearish: capex guidance in this or the next earnings cycle could make peak capex growth a trading theme in late January and February 2027. Some scale-across names may still outperform; SOXX is a short only intraday. x.com x.com x.comÂ
High debt and rate hikes make a big US equity correction likely. Warsh said nothing useful despite hot CPI and PPI after two weeks of hawkish rhetoric, while the rest of the Fed fence-sits. A debt crisis is incoming, and some funds will blow up soon. Big caps are the last leg; the bigger correction could be something like 20%. It is not a good time to buy dips. x.com x.com x.com x.com x.com x.com x.comÂ
The pullback in US large-cap equities shows no fundamental shift, so it reads as a correction rather than a bear market. As Venu_7_ notes, corrections are often driven by sentiment, positioning or macro uncertainty, while true bear markets bring slowing earnings, CapEx cuts and breaking leadership; every major drawdown from October 2023 to March 2026 felt like another 2000 or 2008 at the time. Venu_7_ treats sharp pullbacks as part of a bull market until earnings and CapEx break down. x.comÂ
US large-cap stocks are frothy and now need years of earnings to validate today's prices, even though the rally is not irrational. Per FactSet, S&P 500 earnings are up about 28% versus 13% expected, but the Shiller P/E is near 42, close to 1999-2001 extremes. Per @KobeissiLetter, leveraged ETF assets hit a record $177B and the leading-to-coincident indicator ratio of 0.84 matches the 2008 low; per @charliebilello, 90+ day delinquencies hit 13.1% for credit cards and 5.6% for auto loans. x.com … Show more
