1) Earnings. Lots of these this week, the US market momentum continuation will be dependent on Alphabet and Tesla earnings on Wednesday. In Europe, Nestle and Roche earnings on Thursday will be key.
2) Valuations. These are very high in the US: the dividend yield on the S&P 500 is 1.2%, a record low. Yet in Europe you find big cap companies with nice 3% yields, like Nestle and Roche above. Nestle has been weak recently, this is a nice set-up into earnings. This especially in the context of food groups doing more M&A, note Ferrero bought Kellogg’s for $3bn last is 5x sales and 60x EBITDA.
3) Death of Luxury. It seems almost consensus to talk about the “death of luxury” and “luxury fatigue”. Satch Group now is selling at half of book value, yes 0.5x price to book. You can’t fall off the floor. Also Hermes and LVMH are till to report.
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