DC Lite #161

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1. FMS vs. economic growth. The % of FMS investors expecting a stronger global economy over the next 12 months fell by the largest amount since March 2022 (-6% to -27% net), driven by the most negative US outlook since December.

2. Expectations curve. "The yield curve based on inflation expectations has flattened significantly and is now more inverted than it ever has been ... consumers are anticipating much tighter financial conditions than inferred by the market via the nominal yield curve, presenting a risk to consumption, broader economic growth and equity valuations and returns.”

3. SPX vs. equal-weight. "Now that the narrow breadth trade has performed strongly, S&P 500 is at a critical juncture."

4. Stocks vs. Fed (I). Historically, when the Fed cuts "the market pays up for quality and secular growth attributes as pricing power for many cyclical industries softens and the initial string of rate cuts has a limited impact in terms of reviving pricing and operating leverage for lower quality areas."

5. AI EPS. "Investors are getting impatient for an AI 'killer app,' or at least more revenue, as profit forecasts fall for AI ETFs."