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Hey everybody.
I have to make this one quick because it’s 5:03 PM and I’m going to watch the Mets lose another game at 7:10 PM.
Why do I do this to myself?
I want to talk to you about the fundamentals in the U.S. stock market because they’re looking… dare I say… quite strong.
The first stat I will point you to is forward earnings estimates for the S&P 500 which are ripping higher, up 22.9% over the past year.
Financial Advisors: get this chart in your brand, updated daily, on Exhibit A.
The justification for a stock market up 31.5% over the past 12 months can be made almost purely from an earnings standpoint.
Next I’m going to break it down for you by sector.
Over the next 12 months, 8 out of 11 sectors are expected to grow earnings by double digits. 3 of those 8 are expected to grow by more than 25%.
Financial Advisors: get this chart in your brand, updated daily, on Exhibit A.
Tech? +34.3% growth expected over the next 12 months.
Incredible.
And this is not just a large cap phenomenon.
Check out the forward 12-month earnings estimates for the S&P 500 mid and small cap indices.
Financial Advisors: get this chart in your brand, updated daily, on Exhibit A.
Both are hitting new all-time-highs.
Market dynamics under the surface look healthy too.
We update the data for our Exhibit A Advisor-Clients every morning at 9AM EST, so this next one is as of yesterday’s close, but the point still stands.
The entire 5.18% gain in the S&P 500 year-to-date has come from earnings.
Financial Advisors: get this chart in your brand, updated daily, on Exhibit A.
Not multiple expansion. Not some form of euphoria. Not animal spirits. Cold hard profits baby.
And you’re bearish?
I’m kidding, sorta. I’ll call it half-kidding. Because it truly is difficult to be bearish in an environment where 1/ markets have been resilient (April proved this), 2/ earnings are strong (Tech ex-MSFT, AAPL, and NVDA is set to grow profits 50.2% this quarter), and 3/ valuations have literally come in year-to-date (I showed you, the P/E is down over 2%).
You and I have plenty of reasons to be optimistic about the U.S. stock market.
The Mets? Not so much.
One battle at a time.
Thank you, as always, for reading!