🚨💰📈Jazzed to share a special beta version of Axios Markets, a daily newsletter we'll be launching Jan. 7 to cover all the important stories in markets, business and finance.
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Illustration: Aïda Amer/Axios
One of the biggest risks to the stock market is the fear of a recession, much more so than a recession itself, Felix and Courtenay write.
There are warning signs of an economic slowdown, but there's a strong case that a recession could still be several years away.
The bottom line: We have nothing to fear but fear itself.
Go deeper: The Axios AM Deep Dive on "Why we're safer" 10 years after the financial crisis.
The 4 biggest companies in the S&P 500 are tech companies, and even if you go back to the height of the dot-com bubble in 1999, you won't see this degree of tech dominance in the index, Courtenay writes.
Microsoft, Apple, Amazon and Alphabet are the biggest companies in the S&P 500. Add in Facebook (number 6 on the list, right behind Berkshire Hathaway), and the 5 tech giants — just 1% of the companies in the index — account for 14.7% of its total capitalization.
Why it matters: The companies that have become central to our lives and our politics are now also central to our markets.
Yes, but: Tech dominance waxes and wanes. In 1985, IBM was by far the biggest company in America, responsible for over 6% of the S&P 500 on its own. By 1992, there were no tech companies in the top 10 at all.
The bottom line: The S&P is not particularly concentrated now; the top 10 companies always account for about 20% of the total capitalization. What's new is the degree to which tech companies rule the S&P 500. If history is any guide, that dominance won't last very long.
Donald Trump famously uses the stock market as a guide to how well his presidency is going. It's up since his election, but it's down sharply from its highs.
The latest from London. Photo: Amer Ghazzal/Barcroft Media via Getty Images
As this newsletter goes out, Britain's Conservative MPs are voting in secret on whether they have confidence in their leader, Theresa May. The prime minister's failure to hold a vote yesterday on her Brexit plan has revealed her as being, in Norman Lamont's famous phrase, "in office, but not in power."
Be smart: The problem facing the Conservative Party is that defenestrating May solves nothing, Felix writes.
The bottom line: Whether May survives or not (and the pound rallied because she probably will survive), Britain will be in political chaos at least until January, and quite possibly all the way through to the Brexit date of March 29. Don't expect today's vote to clarify anything beyond the narrow question of May's job security.
Meanwhile, governments in Poland and France are also reportedly facing confidence votes this week.
Tweet from @csynnott, after Chrissy Teigen asked for help understanding Brexit
Between the lines: Multibillion-dollar media write-downs are rare, if only because media companies are almost never acquired for billions of dollars in the first place.
More such write-downs could be in the cards, in the wake of Comcast's $30 billion acquisition of NBC Universal and AT&T's $85 billion takeover of Time Warner.
Why it matters: Very few major media acquisitions have worked out well for the buyer. Even so, there's rarely a shortage of executives with media stars in their eyes.
Ratings agency Fitch this morning writes that the "risk of an imminent U.S. recession remains low despite the recent flattening of the U.S. yield curve."
You might have missed the huge market rally last week, what with all the political news and stock market noise: The price on the benchmark 10-year Treasury bond rose from 100.22 on Monday morning to 102.12 at the close on Friday, Felix wrote in Axios Edge.
What's happening: The yield on 10-year notes is falling even as the market expects one more rate hike from the Fed this month. In market jargon, the yield curve is flattening.
The curve has not yet inverted. Small bits of it have inverted, but the yield on the 10-year note is still a tiny bit higher than the yield on 1-year notes, and that's the main indicator that economists look at when they ask whether a recession is coming. Right now we're about 15 basis points away from an inverted yield curve.
Our thought bubble: The yield curve is not — yet — flashing a recession sign. A recession is not a bear market, and neither does it mean a financial crisis.
Pictures of traders with hands on their faces are Felix's favorite. Photo: Spencer Platt/Getty Images
Newspaper style sections are now comparing the current moment to 1929 and predicting an imminent market crash.
Here are the top 5 reasons for the end being nigh, per NYT:
5. Student Debt
3. The End of Easy Money
1. An Anti-Billionaire Uprising Across America