December 2025 3-month SOFR futures (SR3Z5). BUSHY™ is hedged with some 97.25 strike December calls on this contract. Not a recession call, just that too many investors are now positioned in the ‘no landing’ camp for my comfort.
Nasdaq 100 futures vs. Russell 2000 futures (daily chart). Equity markets have similarly seen some violent narrative shifts in recent months, giving rise to some violent factor rotations.
Significant shifts in investor sentiment are the ever-present driver of financial transaction volumes.
Source: Blind Squirrel Macro (note: there may be some inconsistencies in categorization)
Things change…
With only a couple exceptions, global exchanges have been decent investments over the past 5 years.
Versus global equities, the exchanges have been strong outperformers over the past 5 years. The 🐿️ thinks this can be sustained.
Unsurprisingly in an increasingly financialized world, they have (and are expected to) grow revenues at rates considerable ahead of GDP, while delivering impressive cashflow margins and solid double digit ROIC.
With those market and returns profiles, the exchanges still command undemanding valuation multiples (apart from those Indian exchanges naturally!).
The elevated EV/Sales multiple of the exchanges does not worry me that much - the group’s average gross margin is over 90%.
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