Markets present a nuanced picture. The S&P 500 (SPX) and NASDAQ (NDX) remain near highs, yet U.S. breadth continues to narrow. In contrast, global markets such as the Nikkei 225 (N225) and TOPIX are breaking out to multi-decade highs, with financials providing sustained leadership. Precious metals are also gaining traction, with gold (XAU), GDX, and silver (XAG) showing early bull-market characteristics. At the company level, HBM, MELI, and EA delivered notable strength this week.
The question for investors: where does the next opportunity lie?
Key Points:
Market Structure:
- We remain in a structural bull market, with the S&P 500 up ~1.2% this month despite pullbacks in the mega cap momentum stocks
- Breadth has narrowed in U.S. markets (fewer stocks making new highs), but global equities and Canada are showing relative strength. We are focusing here.
Earnings Season & Revisions:
- Companies have generally beaten earnings estimates (~8% on average).
- Positive earnings revisions are trending higher across Q3, Q4, and Q1 2026, led by tech, communications, financials, and energy, while healthcare has lagged.
Financials Leadership:
- Financials continue to drive markets, benefiting from strong cash generation, dividends, and buybacks.
- This strength extends globally, with European and Japanese banks performing well.
Valuations:
- S&P 500 trades at ~22x earnings and 5x book value, levels last seen around 2000…noted
- While valuations are high, mega-cap companies like Microsoft (MSFT) are showing exceptional profitability (e.g., cloud growth up 38% YoY).
Global Momentum:
- Global equities are breaking out: Nikkei 225 at 33-year highs, TOPIX finally exceeding its 1989 peak, and strong moves in Europe and Canada.
- Broad financial sector strength is a common denominator across outperforming global markets.
Inflation & Rates:
- CPI: ~3% in the U.S., ~1.9% in Canada.
- PPI surprised to the upside, driven by services (e.g., travel, telecom, cable, internet) rather than goods.
- Supports expectations for a 25 bps Fed rate cut in September, not 50 bps.
Commodities & Gold:
- Gold remains one of the best-performing assets this year
- Gold miners (GDX) are showing multiple expansion as producers report stronger-than-expected cash flows.
- Signs suggest the gold bull market is still in early stages, with silver beginning to outperform.
Company & Sector Highlights:
- Hudbay Mining (HBM) surged ~19% after a $600M financing deal with Mitsubishi, making it a potential M&A target.
- Mercado Libre (MELI) continues strong growth in e-commerce and digital services; expected EPS growth: +22% in 2025 and +44% in 2026.
- Electronic Arts (EA) beta launch attracted 400k concurrent users, supporting optimism for long-term growth.