This market will resolve YES if https://companiesmarketcap.com/ shows LVMH as the company with the highest market cap in Europe at the 31st of July 2023 one hour after NYSE closes.
For the purpose of this market "Europe" are the countries that are in the MSCI Europe Index.
Currently these are Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.
🏅 Top traders
| # | Name | Total profit |
|---|---|---|
| 1 | Ṁ29 | |
| 2 | Ṁ18 | |
| 3 | Ṁ17 | |
| 4 | Ṁ12 | |
| 5 | Ṁ11 |
5 days left, this probably should be higher.
market cap ($B) of LVMH - NVO = 455.29 - 357.96 = 97.33
The quarterly report for LVMH was a couple of days ago, so with 5 days left it is unlikely there to be a big shock to the market or the company.
As far as I can tell there are only 4 stocks in this group that barely come close as contenders (looking at historical market caps):
https://companiesmarketcap.com/novo-nordisk/marketcap/
https://companiesmarketcap.com/roche/marketcap/
https://companiesmarketcap.com/asml/marketcap/
https://companiesmarketcap.com/nestle/marketcap/
None of these four contenders have had a market cap higher than $400bn in the last 20 years. LVMH meanwhile has a market cap of $468bn. So the question might be re-framed will LVMH drop more than 15% AND any of these other contenders (NVO has the highest right now with $357bn) increase by more than 12% this month? An article on seekingalpha.com suggests the risks to LVMH are a recession or the retirement of the CEO of LVMH (74yrs old), both of which seem very unlikely this next month.
It is difficult to put a number on the conjuction of earnings missed for LVMH & rising for a contender resulting in more than 10% change in marketcap for a pair of stocks, but I believe it is less than 4%. For instance, eyeballing the marketcap graph for NVO, there are only 2 times in the 22 years that it has jumped by anything close to such a large enough amount in the scenario above: 2 / 88 quarters ~= 2.2%, and the conjunction of this with the LVMH marketcap dropping >15% makes this even more unlikely (LVMH looks like it has dropped a large enough amount a couple times as well: 2/ 84 quarters ~= 2.4%).
Risk of recession in the next month seems small considering recent articles I have read, although the NY Fed (in April?) did predict a recession that will happen later this year. I believe the chance of that happening in July is small, but I will update if there is more indicators of it happening soon. If there is a cause for the LVMH stock to drop drastically relative to it's contenders, this is the one with the most risk I believe. A recent article suggesting a recession has low probability this year (which suggests an even lower probability in the next 28 days):
"Wells Fargo's team of economists wrote in a note to clients on Wednesday. "As a result, we have pushed back our expectations for the start of economic contraction to Q1-2024."
Wells Fargo isn't the only one becoming more optimistic about the outlook for economic expansion in 2023. Goldman Sachs cut its odds of a recession this year from 35% down to 25% earlier this week."
Using this 25% number (very roughly), I estimate how likely I think there will be a recession is in the next 28 days: very simply 25% / 6 months ~= 4%,
There are articles from a few months ago talking about testing his successors, and given that I think the retirement is still some time in the future. As for the CEO dying, he is 74 and based on the life table https://apps.who.int/gho/data/view.searo.60580?lang=en he has only a ~2.3% chance of dying this year (dying in the next 28 days is considerably smaller); I place (guess) the chance of him retiring in the next 28 days at < 1% based on the articles I have read (they want to extend the maximum age to 80 for someone to be CEO, which suggests he will be there for a while).
Expecting normal (no recession) conditions for the next month, I believe the consensus earnings forecasts for LVMH and the other contenders show it is unlikely any quarterly earnings reports will cause this market to resolve NO.
My bet in YES mainly reduces to how likely I think there will be a recession as this is the largest risk (I have used 4%, but if I can find a better number I will use that). Based on my analysis and the current market % I should bet 300 to raise it to 96%; for this question I will use my confidence in my prediction as 70% and reduce my bet to 210 on YES.