00:00 Speaker A
Chuck, nice to meet you. I actually want to start from a broader perspective, Chuck, uh, because you described the current setup here. You said, that’s almost ideal, Chuck, you said, that’s almost ideal for stocks. Walk me through the process. What makes this context so constructive?
00:21 Chuck
Well, first of all, despite people being nervous about tariffs and everything else, the economy continues to move forward. Well, the economic expansion continues at a very solid pace. Well, actual growth has been pretty strong. Well, we see that based on the latest estimate from the Atlanta Fed, the GDP estimate is over 5%. Well, the economy is doing well because the economy is doing well and we see that reflected in corporate earnings. Corporate earnings continue to grow at a fairly rapid pace. Well, these companies are reporting and they continue to beat expectations. Here’s another new piece of good news. Well, the third issue is interest rates and inflation. Uh, we’re not seeing any increase in inflation. We see a little bit lower. Well, trend is your friend even though it’s not hitting the Fed’s 2% target, uh, but it’s not rising and therefore, rates are unlikely to rise. The Federal Reserve is under pressure to cut interest rates. Uh, that’s another big positive. So there’s really not much going on other than the usual geopolitical turmoil around the world. Uh other than that, I think everything in the country looks good.
01:21 Speaker A
Chuck, what’s the valuation like? How many of the positives you describe are already present here?
01:32 Chuck
Well, you really have to look at these companies. Uh, I don’t really like looking at the P/E multiples on the S&P 500, which are obviously skewed by uh seven to 10 companies that have extremely high P/E multiples but are growing extremely fast. Uh, the rest of the market has much lower P/E ratios and there’s lots and lots of great value out there, and these companies are making money, growing their dividends. Um, so I think you have to look at it on a company by company basis. We’ve seen it start to expand a little bit. So uh the Mag 7 didn’t perform as well as other products on the market last year because the S&P was unpopular, disliked, ignored, uh the S&P 493. So, I’m very optimistic about this part of the market, even the Mag 7, some of which are still very attractive. You just have to look forward to strong growth in the company’s profits.
