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Without further ado, let's look at the changes in the charts: in a general risk-on environment, stocks have been outperforming bonds in recent months. 

The stock market has been driven by a few select stocks. In fact, according to the Wall Street Journal, eight companies (Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Tesla and Nvidia) now make up 30% of the S&P 500’s market capitalization, up from 22% at the start of the year.

This development is reflected in multiple charts. Since December 2022, the Nasdaq has outperformed the S&P 500, Growth stocks have outperformed value stocks, Large-cap stocks have outperformed small-cap stocks, the Technology sector has outperformed the overall market, and US stock market volatility is at its lowest level since February 2020.

According to a comprehensive analysis conducted by Maverick Equity Research, Apple's market capitalization surpasses not only the Russel 2000 index (comprising US small-cap stocks) but also exceeds the combined market capitalization of the 100 largest publicly traded companies in France, the UK, India, Germany, and Canada.

The recent shifts in the stock market are further evidenced by an uptick in multiples. As pointed out by Vincent Deluard, the five largest US stocks are currently trading at a price-to-earnings (P/E) ratio of 38, surpassing the long-term average of 21.5. To put it into perspective, the P/E ratio of the S&P 500 stands at 24.43.

The most extreme case is Nvidia, which, according to Peter Mallouk and Charlie Bilello, has only $26 billion in sales versus $208-525 billion for the Big 4 (Microsoft, Apple, Google and Amazon). The stock now trades at over 38x sales and over 200x earnings. We’ve never before seen a price to sales ratio that high for a company of its size.

With the stock market firmly in the grasp of the AI frenzy, the bond market is sounding an alarm with a significantly inverted Yield Curve. @RA_Insights puts the magnitude of this ongoing inversion into perspective.

Shifting our focus to real estate, the Home Price to Median Household Income Ratio stands at 7.58 and is still above its peak from 2006. In other words, the average house in the US currently costs 7.58 times the median household income.

Adjusted for inflation, home prices peaked in May 2022 and have been correcting since.

Looking at the cost of financing a home, the average 30-year fixed mortgage rate rose to 6.73% (up from 2.68% in December 2020) and the spread to US Treasury Bonds is at its highest since 1986 (higher than in the aftermath of the 2008 housing bubble).

Let's finish by looking at Crypto. Bitcoin and Ethereum are still up since the start of the year but they have lost some momentum since they peaked on April 16th.

The ratio between the two cryptocurrencies has now been stable for a while around 0.07 BTC per Ether.

In recent events, the overall crypto market experienced a correction as the U.S. Securities and Exchange Commission (SEC) filed lawsuits against Binance and Coinbase for offering 12 cryptocurrency coins without registering them as securities. This lawsuit adds urgency for US lawmakers to produce a regulatory framework for the industry. 
Amidst these events, Bitcoin corrected less then the rest of the market, which caused Bitcoin Dominance to break its long-term resistance at 47%.

As mentioned earlier, this newsletter will now be sent on a quarterly basis. The next edition is scheduled for release in early October 2023.

Thanks for reading and have a nice day!