Core Warning on US Stock Market Topping: Slumping Asian Chip Exports May Signal an Early Capex Peak; Once Earnings Expectations Reverse, High Yields Will Crush Valuations

Bloomberg macro strategist Simon White notes that the key to whether US equities can continue to rise lies not in the level of Treasury yields, but in Asian semiconductor supply chain data. The current resilience of US stocks is primarily underpinned by an exceptional projected earnings growth rate of up to 40% for the S&P 500 index over the next three years. The impact of high discount rates is temporarily offset by strong revenue and margin expectations, and the current rise in yields is driven by real interest rates reflecting actual economic growth, which have not yet posed a substantive threat to the stock market.