Everything Hinges on Just 10 Companies

It's now official: the 10 largest companies in the S&P 500 represent over 40% of the index's total market cap. This threshold was crossed following record rallies by tech giants. Over the past year, Nvidia has surged over 65%, becoming the world's second most capitalized asset behind gold. Alphabet is not far behind, with a stellar 137% increase over the same period, followed by Apple's 46% rise.

Amazon is up 30%, Broadcom 80%, Tesla 21%, and Walmart 33%. Amongst the top 10 market caps, only Microsoft (-8%), Meta (-5%), and Berkshire Hathaway (-6%) have declined over the year.

This type of concentration has been seen before, and it has rarely boded well: in 2000 before the dot-com bubble burst, and in 1965 just before the "Nifty Fifty" bubble crisis.

The Potent Mix of Inflation and Policy Rates

For most global citizens, the energy crisis in the Middle East has meant the return of high inflation. On the front line, soaring energy prices have led to a broad-based increase: the Consumer Price Index is currently 3.8% in the US, while in Europe, the 3% mark has just been breached.

Added to this is the wait-and-see approach of central banks. While status quo is not an error in itself, it recently precipitated a drop in the 1-month real rate, which fell back into negative territory at -1.11% in May 2026 in the US.

Such a phenomenon is not unprecedented, and a tightening of monetary policy generally facilitates a course correction. However, this situation poses serious problems: holding cash effectively means losing money, which incentivizes economic actors to invest rather than save.

A rate hike appears to be looming for the remainder of the fiscal year, a pivot that should see real rates return above zero.

1-Month Real Rates Source - Fred

United States: Defaults at Highest Level Since 2010

Another shadow over the US economic outlook: payments overdue by more than 90 days have reached levels not seen since 2010. Credit card debt is on the front lines, with default rates approaching 15%, an alarming indicator of the financial pressure weighing on households.

The automotive sector is following the same trajectory. Defaults on auto loans have just crossed the 5% threshold, a direct reflection of the growing difficulties people are facing in settling their everyday bills.

Regarding student loans, defaults have returned to pre-crisis levels. The sharp decline observed between 2022 and 2025 was thanks to the suspension of payments mandated by the US government. Although this measure provided temporary relief to borrowers, it clearly did not improve their long-term repayment capacity.

While other credit categories show a more moderate and controlled increase in delinquencies, the overall conclusion remains undeniable: households are bearing the full brunt of inflation.

Percentage of 90+ day delinquency (default) rates in the US Source - New York Fed Consumer Credit Panel