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10k Words Equitable Investors July 2025 Apparently, Confucius did not say "One Picture is Worth Ten Thousand Words" after all. It was an advertisement in a 1920s trade journal for the use of images in ads on the sides of streetcars... We get a bit fixated on US equity valuations, with Vanguard highlighting the high hurdles required to achieve another decade of >12% returns; even as the 10 year bond yield has been more competitive and tariffs drive negative earnings revisions in the US. The Ex-US equities world has been fairing better out of the tariff scenario. We check in on interest rate expectations in the US and Australia. Bain bemoans a softer global buyout environment lately while The Information tackles the private market liquidity problem graphically. Finally, the US office CMBS delinquency rate charts near-vertical while Aussie mortgage arrears have been on the rise. Total market cap of S&P 500 firms >10x Price/Sales (US$ trillion)
Source: Kailash Capital Research Repeat of returns >12% for US equities requires record-high profit margins, record-high valuations, or a combination of both
Source: Vanguard S&P 500 Price/Free Cash Flow (cap weighted and equal weighted) v index level
Source: Fidelity US 10-year government bond yield
Source: FRED Consensus S&P 500 earnings by calendar year
Source: Columbia Threadneedle Forward 12-month global earnings forecasts & net balance of upgrades v downgrades
Source: Barclays Private Bank % of companies with downwards earnings revisions & impact of tariffs
Source: Schwab The rest of the world is ahead since Feb 19 - in common currency
US market still looking for a Fed Reserve cash rate cut in September - but not quite as sure as a week ago
Source: CME Australian market backing in a 25 basis points rate cut by the RBA in July
Source: ASX Global buyout deal value, by region ($US billion)
Source: Bain, Dealogic Scarcity of opportunities to convert private investments into cash
Source: The Information Australia mortgage arrears
Source: cotality US Office CMBS delinquency rate %
Source: Trepp, WOLFSTREET.com July 2025 Edition Funds operated by this manager: Equitable Investors Dragonfly Fund Disclaimer Past performance is not a reliable indicator of future performance. Fund returns are quoted net of all fees, expenses and accrued performance fees. Delivery of this report to a recipient should not be relied on as a representation that there has been no change since the preparation date in the affairs or financial condition of the Fund or the Trustee; or that the information contained in this report remains accurate or complete at any time after the preparation date. Equitable Investors Pty Ltd (EI) does not guarantee or make any representation or warranty as to the accuracy or completeness of the information in this report. To the extent permitted by law, EI disclaims all liability that may otherwise arise due to any information in this report being inaccurate or information being omitted. This report does not take into account the particular investment objectives, financial situation and needs of potential investors. Before making a decision to invest in the Fund the recipient should obtain professional advice. This report does not purport to contain all the information that the recipient may require to evaluate a possible investment in the Fund. The recipient should conduct their own independent analysis of the Fund and refer to the current Information Memorandum, which is available from EI. |
