Amazon Alone Is Responsible For More Than A Third Of The S&P's Return This Year

Whether it is capital inflows that cause stock outperformance, or rising stocks leads to investors chasing upside is one of those perpetual "chicken or egg" type financial questions (although in this day and age of index funds and passive investing lifting all "Marxist" boats on a sea of $18 trillion in  excess liquidity without regard for fundamentals, we have a strong feeling what the right answer may be) but whichever way the causal arrow points, one thing is certain: amid turbulent capital markets, panic-inducing spikes in volatility, and emerging markets on the verge of a bear market, tech stocks have seen a relentless investor interest in 2018, or as Eric Peters put it, "tech fund inflows are running at a $37bln annualized pace this year, 2x last year’s stunning rate and 10x higher than any year in the past 15."

In light of such an outpouring of capital, it probably should not come as a surprise just how much of an outlier tech performance has been, and yet the following table from Goldman's David Kostin is shocking nonetheless. It shows that in 2018 whose the first half just concluded, just one stock alone is responsible for more than a third of the market's performance: Amazon, whose 45% YTD return has contributed to 36% of the S&P 3% total return this year, including dividends.

Amazon aside, the rest of the Top 10 S&P 500 stocks of 2018 are the who's who of the tech world, and collectively their total return amounts to 122% of the S&P total return in the first half of the year.

And another striking fact: just the Top 4 stocks, Amazon, Microsoft, Apple and Netflix have been responsible for 84% of the S&P upside in 2018 (and yes, these are more or less the stocks David Einhorn is short in his bubble basket, which explains his -19% YTD return).

Of course, after such a historic start to the year, the question is whether this unprecedented tech outperformance will continue? If Morgan Stanley is right, which expects a sharp market response to the escalating trade wars - which it has largely ignored for now - to hit soon, the answer is no:

In equities, our team thinks that US tech is vulnerable as a sector where pricing has been insensitive to trade risks so far.

For the sake of the market - and Trump's sense of S&P500-defined self-worth - MS better be wrong, because if resilient tech stocks are what has kept US equity market above water so far even as the rest of the world has slumped, then a tech crash may be all that it takes to launch the next recession.

Comments

The Ram Sun, 07/01/2018 - 19:41 Permalink

4 stocks producing 84% of the S&P upside?  Now, that sounds like a very balanced economy and market.  I call this the Marie Antoinette economy, ie, let all the others eat cake.

enforcer92677 Sun, 07/01/2018 - 19:42 Permalink

Why is their constant whining and hand-wringing about the next recession?  We are due for an epic crash.  Burn this fucker down already!  Geez just rip the bandaid off.

ghengiskhan enforcer92677 Sun, 07/01/2018 - 19:58 Permalink

Something worse is in store.  Much worse.  These markets and the insane policy decisions that brought us here are merely a symptom of a huge problem.  It is now clear that the think tanks at George Mason and MIT were correct when they started measuring the unintended consequences of this new instant information world we live in and surmised that societal collapse was guaranteed.  The average human brain can't handle the level of adaptation required to process this much instant information properly and we are witnessing the beginning of cascade failure as cognitive collapse occurs in the weaker brains.  Like popcorn they will go faster and faster.  This has been accelerating for 20 years and now cascade failure is upon us.  It's a dragon curve that has finally taken shape.  The Mayans were right all along.  We hit a critical adaptation point in 2000 just as high speed internet began to propagate with no direction and no specific purpose and that was our point.  Then in 2012 mobility propagated and we went over the cliff.

In reply to by enforcer92677

khnum ghengiskhan Sun, 07/01/2018 - 20:32 Permalink

Mans knowledge is now doubling every 13 months and whilst I try to keep up there is no way to double my knowledge in 13 months and Im certainly not going to double any wisdom I have in that time either,therefore its not nice to admit but I and everybody else are becoming increasingly ignorant at an exponential rate...its not going to end well.

In reply to by ghengiskhan

Yen Cross Sun, 07/01/2018 - 19:43 Permalink

  All the spoos  futures are flat to down From Friday. The $usd opened lower and gold/silver is bid.

  The usd/jpy looks like it's double topping on daily chart.

  CL/WTI futures gaped much lower. https://imgur.com/a/UFi6G0g

  Selling off the Friday close as the gap fills, might be a good trade.

exartizo Sun, 07/01/2018 - 20:14 Permalink

...so three companies that manufacture zero and one company that makes The Most Hedonistic Device Ever Created.

Welcome to early 21st Century America.

SH_Resurrected Sun, 07/01/2018 - 20:18 Permalink

Does ZeroHedge have an editor?  If so, does he know how to read and write?

Hey, Tyler, take some basic grammar/writing lessons!

...could not get past that fucking pathetic jumbled mess that you've tried to pass as a first paragraph.

Jeez...

rejected Sun, 07/01/2018 - 22:01 Permalink

Amazon is the biggest farce to ever exist. Like Tesla its the 21st Century Tulip boondoggle. 

Every price I see is higher then most other retailers. No humans to talk to if a problem. They hold your order for 4-5 days if your stupid enough to take them up on their free shipping. Returns are a nightmare. Half the time warranties don't apply to Amazon sold products.

They haven't made any real profits. From Forbes:

"There is a new calculus in corporate boardrooms. Profits are so yesterday. Now it’s all about vision and great storytelling."

and

"Other companies, at least ones that don’t compete directly with Amazon, are starting to get the same leeway. Tesla makes very cool electric cars. It also makes lots of big losses. "

https://www.forbes.com/sites/jonmarkman/2017/05/23/the-amazon-era-no-pr…

And we all know Amazon is part of the intelligence 'community'. Now they're getting big government contracts (aka your money) to do "The Cloud" for the NSA. Yes,,, All your personal data in Amazons Cloud. No problem there,,,, lol.

Amazon mistreats and under pays their employees,,, and for all you MAGA Amazon is THE Chinese distribution center, second only to Walmart. Yes they love your money but hate you having decent jobs.

Amazon dot Con.....

 

Solosides rejected Mon, 07/02/2018 - 12:54 Permalink

I have to deal with Amazon's back end operations everyday while I add and edit products for my company. Everything, including the fucking terms negotiations, are handled by Pajeet in India. And Pajeet knows barely enough English to copy and paste the generic responses he has saved on notepad. Any time there is serious problem that is costing both sides hundreds or even thousands of dollars, Amazon will take WEEKS to just simply reply to your support ticket. Not to mention it is impossible to call anyone at the company that can help you. And forget trying to sue them. It is literally impossible to sue Amazon. They have 100+ attorneys on payroll and another 50+ idiots that do pro-bono work for them.

 

AMZN is the biggest pump and dump in the history of mankind.

In reply to by rejected

Thalamus Sun, 07/01/2018 - 22:25 Permalink

I like the persistent jabs at index funds.  They are superior to managed funds consistently but the human managers have a campaign of disinformation against them —don’t believe it.  Amazon needs broken up...unfair advantage with UPS contract. 

Let it Go Sun, 07/01/2018 - 22:33 Permalink

This is the evil we face and many people simply do not care. Amazon is a job killing exploiter. The fact is that many of the options Bezos employs to expand Amazon are available to him only because of the many areas his various companies engage in and this is the crux of growing antitrust talk. 

Jeff Bezos did not purchase the Washington Post in 2013 because he expected newspapers to make a lucrative resurgence. He purchased the long-trusted U.S. newspaper for the power it would ensure him in Washington and because it could be wielded as a propaganda mouthpiece to extend his ability to both shape and control public opinion.

http://Trump And Bezos Face Off - Clash Of The Titans!html