Alpha in Academia

Many measures show that stocks are historically expensive. However, this measure, which looks at the median stock in the S&P 500, shows that stocks may not be that rich, overall.

Additionally, profit margins are much higher today than in 2000.

Slow job growth, strong GDP. Torsten Slok believes this is due to slower foreign born job growth, AI productivity gains, and slower government job growth.

Are there other explanatory factors?

The yen carry trade is back - since the blowup last summer, the short yen / long peso carry trade has outperformed the S&P 500:

An interesting chart by Apollo’s Torsten Slok:

The historical tendency of equally-weighted (EW) stock indices to outperform their capitalization-weighted (CW) counterparts is shown to be linked to the degree of market concentration.

A modest 0.5°C rise in global temperatures induces a significant 0.65 percentage point increase in five-year-ahead inflation expectations.

A more dovish reading on an index that measures Fed tone precedes lower US Treasury bond yields across the curve.

Interesting findings from this week’s Recent Academic Research post:

During economic meltdowns, alternative investments like private equity and venture capital are strategic accelerators of recovery.

(more in comments)

Earlier this year, I called out the high gold-silver ratio. Since then, the ratio has exhibited a traditional mean reversion:

The natural gas turbine industry is dominated by three major players. With the rising demand for energy, can suppliers keep up?

Once again, economic consensus is wrong for 2025. Over the past few years, economists have been overly pessimistic.

This is an interesting chart. Since the 1960s, consumer pessimism at this level either preceded a recession or came shortly after it:

In our most recent post, we explore the use of forecasting models in prediction markets. Specifically, we looked to see if there was opportunity in the initial jobless claims Kalshi market.

The Fed’s model for the US economy finds that a 10% depreciation in the dollar results in a 0.3% boost to inflation:

I do agree with you. However, for most of U.S. history before the modern income tax was created in 1913, the federal government relied heavily on customs duties, so tariff revenue was far greater than income tax revenue (which either didn’t exist or was minimal). To be fair, spending was also lower.

The rally in gold is the greatest since stagflation in the late 70s.

Will PE rebound if we enter a full cutting cycle? Or is the space too competitive?

The $100,000 fee for H1B visas only affects new visas. How will this impact hiring among the largest tech firms?

An interesting chart by Apollo. Can tariff revenue offset or replace income taxes?

it takes significantly longer for PE portfolio companies purchased at higher multiples to exit relative to portfolio companies bought at lower multiples

Some interesting post Liberation day shifts in imports…

What happens when the VC money stops flowing to AI and ML?

Apollo’s new chartbook shows that Mag 7 concentration in the S&P 500 is only increasing, yet their earnings growth is slowing:

70% of US GDP comes from consumption, and nearly 50% of all spending comes from consumers in the top 10% of income.

Torsten Slok, the chief economist at Apollo, argues that passive investing reduces market efficiency and increases systemic risk:

Greater central bank independence = lower average inflation:

First time since 2021 in which there were more unemployed people than job openings:

Return to office stalling…

EPU is falling to its pre-Liberation day levels:

Return to office stalling…

Consumer spending is slowing down: