Why the stock market has a great distance to rise in the coming years
There is a lot to talk about in the stock market – and the world, really – at the moment, but in our conversation Michael Kramer, founder of Mott Capital Management, is certain that there is some serious upside potential in the coming years.
It all starts with value judgments.
Kramer points out that the earnings multiple of the S&P 500 index
SPX, -0.39%
on a 12-month basis is around 19.7, the lowest level since June 201[ads1]6 – a time when “the world literally felt like it was on the verge of a decomposition ". (This multiple is a key method for measuring the value of a stock relative to earnings.)
But in reality that might mean the most to the markets, we were in the middle of an earnings recession that was about to end.
The beef market was alive, and three years later it still does, he says.
Read: How big will this year's end be?
For some context, Kramer used revenue data back to 1988 and estimates until 2020, and then left it with a chart of S&P for what he says is a self-explanatory reflection of where we stand.
And more importantly where we are heading.
Kramer explained that the numbers show attractive stock valuations, and if corporate earnings continue to rise as expected, the market has "a great distance to rise" in the coming year.
Stocks are increasing this morning, but not at "great distance" yet.
Market
Futures on the Dow
YM00, + 0.16% ,
S&P
ES00, + 0.30%
and Nasdaq
NQ00, + 0.36%
are all in the green in front of the opening clock. The pound
GBPUSD, + 0.2312%
is quite unstable as investors wait for more Brexit updates after Prime Minister Boris Johnson's vote was a non-start on Saturday. Europe
SXXP, + 0.48%
Stocks are up.
The chart
Yeah, it's a bit hairy out there.
Buzz
We have a great week of revenue emerging, with watches like Microsoft
MSFT, -1.63% ,
Amazon
AMZN, -1.68% ,
Procter & Gamble
PG, + 0.72%
and Boeing
BA, -6.79%
among notable sources.
Voters don't have to wait much longer to hear how Democratic presidential candidate Elizabeth Warren plans to pay for the "Medicare for All" future. The Massachusetts senator, who says she will give details of her plan soon, came under fierce fire from her opponents during last week's debate for refusing to say whether her plan would raise taxes in the middle class.
The strike at General Motors
GM, -0.06%
throws over to another month, and impact increases across the Midwest in the UShe United Auto Workers Union struck a tentative labor agreement with GM last week, but union leaders chose to continue picketing to employees approves the agreement.
The quote
“Market stability should not be the subject of a tweet here or a tweet there. It requires consideration, thinking, quiet and measured and rational decisions. ”- Christine Lagarde, soon President of the European Central Bank, in an interview aired on Sunday night on CBS & # 39; 60 Minutes.
The Economy
New and existing home sales figures for September are probably the economic highlight of the week, but we will not look at these until Thursday and Tuesday respectively. There is nothing on the note today. The University of Michigan rounds out the week Friday morning with the Consumer Sentiment Index.
Read: The latest data does nothing for investor sentiment.
The Tweet
Random reader
Immigrants can buy 1000 fake followers on Facebook
FB, -2.38%
for $ 34. Advertisers pay billions to share products for real people.
It is a bear market in religion.
This certainly looks like Republican Senator Mitt Romney's secret Twitter
TWTR, -1.57%
account.
A man stabbed his brother to death; now he earns six figures in Silicon Valley.
The bleak reality of what climate change can do for three major US cities.
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