May 2026 has been a month of superlatives, with records being broken one after another and countless new 'all-time highs' for stock market indices. This trend is being driven by technology stocks, and the market capitalisation of just a few companies is striking: 13 companies each now have market caps exceeding $1 trillion. Berkshire Hathaway is the sole non-Tech member of this club led by Nvidia, a club that has just welcomed three new members this month: Samsung, Micron and SK Hynix. The trajectory in capital expenditures is also mind boggling with the big four – Amazon, Microsoft, Alphabet and Meta – alone expected to spend over 600 billion by the end of 2026. Whilst equity investors are relentlessly betting on the same winners, Fixed Income investors are having less of a party with the 30-year US bond reaching a record not seen since 2007… Seeing long term rates hit new highs at a time when the US deficit is over 6% of GDP and when the US's flagship industry is in frantic need of capital expenditure, is a cause for concern. The highly imperfect but nonetheless likely Iran-US agreement should bring down inflation expectations and thus potentially long-term rates. Nevertheless, just as much as the bubble indicators, the level of US long-term rates must remain under scrutiny… We are developing these topics in our newsletter.
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