Don’t Forget The Mega-Caps
What's next for US equities?
At the risk of stating the obvious, a lot depends on what happens in rates and especially how things develop at the long-end of the US Treasury curve.
Stocks remain more resilient than they probably ought to be given where reals are, but at various intervals over the last two months, rates fatigue plainly set in. Valuations respond to reals, and 10-year real rates are the highest since 2008.
It's not just the level. The rapidity of rate-rise was already remarkab
I don’t know about all of the mega caps, but from Apple’s last 10-K (filed in 2022) and most recent 10Q, they have $105B of fixed rate debt, at effective rates ranging from 0.03%-4.78%.
The debt maturities range from only $9.6-$11.2 billion/year through 2027.
So – minimal concern over refinancing at higher rates until 2028 and beyond.
Now Im curious to know what your current asset allocation is (stocks/bonds/cash etc) 🙂
I don’t know who you want to know about but right now I am 32% in various equities, including REITs, BDCs and specialized equity CEFs; 52% in various fixed income assets including 50 individual issues and the rest in various types of funds; and the remainder (16%) is in cash. Income from this portfolio has been rising all year on both a YoY basis and as a percent of assets. These are investable assets only. Not counted among these assets is my home, car, art collection and the present value of five life annuities that provide all my non-investment income, all debt free.
About half cash/money market/bills, half equities. Of equities, 5% in MegaTechs.