Making Markets Quarterly Market Recap: Q2 2024 - [Making Markets, EP.39]
Jul 26, 2024
Delving into the remarkable Q2 market performance, they talk about active management challenges and AI boom. Tech giants' capital deployment, fixed income insights, and election year influences are discussed. Also, they touch on small cap performance, international markets, and the rise of crypto.
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Resurgent Bull Market
- The market strength, with the S&P up 15% and NASDAQ up 18% YTD, signals a potential end to the short-lived bear market.
- This consistent upward trend, continuing for over a decade, presents challenges for active managers.
Mega-Cap Dominance
- Mega-cap growth companies, particularly in tech, drive market returns, making it difficult for active managers to outperform.
- This concentrated growth resembles past trends like the Nifty 50 or FANGs, but current P/E ratios are not as inflated as in the dot-com bubble.
The AI Revolution
- AI is a regime-changing technology, like the internet or mobile, driving a unique capital expenditure cycle.
- Unlike SaaS, where wealth transfer occurs, AI involves substantial hardware investment, favoring large companies like Nvidia.