Below are a couple of charts that speak for themselves. The Mega Cap companies on the S&P 500 are trading at historically high P/E ratios while the smaller companies on the Russell 2000 are trading at low P/E ratios. I don’t think you need a degree in rocket science to figure out what will happen next.

Like I said in my note last week, at some point these variances will revert to the mean. My guess is it’s starting to happen now. One other note is that some of these large cap companies have seen insiders selling shares. That is not always negative (people sell shares for many reasons) but it’s certainly something that we watch.

I've also included a piece from our CIBC Economics team entitled "Inflationary Buffet”.

As always, if you have any questions, please feel free to give us a call at any time.

Have a great weekend.

Milan