Rapid S&P 500 Valuation Surge is a 4-Sigma Event in the Making

S&P 500 on the brink of an all-time high after a 4-sigma move in valuations

Highlights

• S&P 500 on the brink of an all-time high after a 4-sigma move in valuations

• Trump’s Fed plan puts more political pressure on the rate outlook

• Stocks, bonds, and the U.S. dollar signal strong conviction of a July rate cut

• Markets are pricing a big, beautiful economy in a peaceful world

Key Takeaways

• Stocks Keep Surging in the U.S. and Europe; Asian Indices are mixed as Chinese Profits Show Big Decline: Global equities entered the week on a solid footing and remained strong, bringing the S&P 500 to where it looks like the index will reclaim its record high. U.S. futures are in the green right across the board. Asia was more mixed, but there were impressive gains in Japan’s Nikkei 225 (+1.4%), Singapore (+0.5%), Taiwan (+0.4%), and India (+0.3%). These were offset, mind you, by losses in Thailand (-1.9%), Korea (-0.8%) and China’s Shanghai Composite (-0.7%) — the Shanghai Composite was undercut by the news that Chinese industrial profits disappointed in May, contracting at a -9.1% YoY pace as deflationary pressures continue to weigh on the corporate sector.