TOPLEY’S TOP 10 June 10 2024

1. A Few Charts on Market Concentration

The Top 10 stocks in the S&P500 now make up a record-high 35% of the index, see chart below.-Torsten Slok Apollo

2. Percentage of Stocks Outperforming Index

RBA Advisors

From Callum Thomas

3. Europe Mag 7 Outperforming U.S. Mag 7 Since 2022

Capital Group

4. Mega-Caps Led Performance in May

5. NVDA Worth $102M Per Employee

Doug Short Advisor Perspectives

The records have been coming thick and fast for AI phenomenon Nvidia recently — and on Wednesday it ticked off two more major milestones. The company crossed the $3 trillion market cap mark and simultaneously surpassed Apple to become the second most valuable company in the world.

There are a lot of ways to value a company: price-to-earnings multiples, discounted cash flow analysis, or EV-to-EBITDA multiples are all favorites of equity analysts… though each is often more of an art than a science. One really simple fundamental metric is: how much value is being ascribed for every person that it employs? For Nvidia, after this latest run-up took it north of the $3T milestone, the company is being valued at more than $100M for each of its 29,600 employees (per its filing that counted up to the end of Jan 2024).

That’s more than 5x any of its big tech peers, and hundreds of times higher than more labor-intensive companies like Walmart and Amazon. It is worth noting that Nvidia has very likely done some hiring since the end of January — the company might just be in growth mode — but even if the HR department has been working non-stop, Nvidia will still be a major outlier on this simple measure.

We are running out of ways to describe Nvidia’s recent run… but a nine-figure valuation per employee is a new one.

6. Bill Ackman Pershing Square Going IPO….Pershing Square Holdings in London PSHZF Trades at Sizable Premium to Big Money Managers

One valuation metric is market value relative to assets. Traditional asset managers likeBlackRock are valued at 1% to 3% of assets, while higher-fee alternative managers likeBlackstoneAres Management, and Blue Owl Capital are valued at 10% to 15% of assets. Pershing Square is valued at nearly 60% of assets.

7. Copper Hit Friday…Closes Below 50-Day

8. GOLD Hit Friday….GLD Closes Below 50 Day

9. Inflation -Fed Funds Minus Core CPI is in Restrictive Zone

Unio Capital

10. Russian Demographics Were Bad Before Ukraine War….Now Crisis Mode

In the midst of the economic and social upheaval that followed, growing numbers of Russians died from cardiovascular disease, suicides, traffic accidents and other causes—often related to heavy drinking—and women had fewer babies.

By 2003, Russia’s life expectancy had dropped to about 65 years from 69 in 1990, far below many Western countries at the time. A more stable economy, along with policies restricting alcohol purchases and antismoking campaigns, helped push that up to about 70 years in 2022—still below most developed countries, according to United Nations data. The U.S. had a life expectancy of about 78 years. Estonia, a former Soviet republic, had a life expectancy of 79 years. 

By Betsy McKay and Georgi Kantchev