ResearchDeutsche BankJim Reid | (+44) 20 7547 2943 | jim.reid@db.comImage by DALL-EDeutsche BankResearchA Macro Guide to the Magnificent SevenFebruary 2024#PositiveImpactIMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Jim Reid(+44)-20-754-72943jim.reid@db.comGalina Pozdnyakova(+44)-20-754-74994galina.pozdnyakova@db.comLuke Templeman(+44)-20-754-10130luke.templeman@db.com0Distributed on: 13/02/2024 05:38:06 GMT7T2se3r0Ot6kwoPaResearchDeutsche BankJim Reid | (+44) 20 7547 2943 | jim.reid@db.comThe Magnificent Seven have dominated stock markets over the last few years. However, even well before they went exponential, back in 2015, Apple, Alphabet and Microsoft were already the 1st, 3rd and 4th largest members of the S&P 500..Total returns in USD since March 2015, indexed to 100Source: Bloomberg Finance LP, Deutsche Bank.102004006008001,0001,2001,4001,6001,8002,000201520162017201820192020202120222023BBG Magnificent 7 indexS&P 500Nasdaq 100Stoxx 600ResearchDeutsche BankJim Reid | (+44) 20 7547 2943 | jim.reid@db.comAs a result of the Mag 7’s dominance, the US stock market is close to being the most concentrated in history... So the performance of the Mag 7 is increasingly crucial to macro as a result... In the past mean reversion has occurred. But is this time different?Top 10% of stocks by size versus the entire US stock marketSource: Kenneth R. French database, Deutsche Bank.245%50%55%60%65%70%75%80%19261928193119331936193819411943194519481950195319551957196019621965196719701972197419771979198219841986198919911994199619992001200320062008201120132015201820202023Market cap concentration among top 10% largest US stocksMedianCurrentResearchDeutsche BankJim Reid | (+44) 20 7547 2943 | jim.reid@db.comThe concentration rivals the “Nifty Fifty” period of the late 60s/early 70s where investors drove high-quality, market-leading stocks higher and higher in valuation until the inflation/higher yields of the 1970s changed the landscape. We’ll see on slides 11-12 what happened to all the top-5 S&P 500 stocks of the last 60 years...Share of top 5 cos. by market cap in S&P 500. Top 5 annotated through historySource: DB Asset Allocation, Deutsche Bank.310%15%20%25%30%10%15%20%25%30%Jan-66Jan-69Jan-72Jan-75Jan-78Jan-81Jan-84Jan-87Jan-90Jan-93Jan-96Jan-99Jan-02Jan-05Jan-08Jan-11Jan-14Jan-17Jan-20Jan-23Dot-com bubble peakMicrosoft, Cisco, GE, Intel, Exxon2022 sell-offApple, Microsoft, Alphabet, Amazon, Berkshire HathawayFeb 2024Microsoft, Apple, Alphabet, Amazon, NvidiaGFCExxon, Walmart, P&G, Microsoft, GEApple, Exxon, Microsoft, Walmart, Alphabet1994 hiking cycleGE, AT&T, Exxon, HCA Healthcare, Royal Dutch PetroleumAT&T breakupIBM, AT&T, Exxon, GE, GMFed hiking cycle IBM, AT&T, Exxon, GE, GMNifty Fifty peakIBM, AT&T, Exxon, Eastman Kodak, GMIBM, AT&T, GM, Eastman Kodak, ExxonRese...
