How to Keep This Market Moving

The market keeps flying.   The S&P hit a new all-time high of 6,099 yesterday. That's up 28% for the year, and 75% from the October lows set just over two years ago.   Valuations have gone along for the ride, too.   S&P company valuations as a percent of sales exceed all levels achieved over the past three decades (MVA margin below). And nearly 50% of that valuation depends on continued growth in competitive profits (Future Growth Reliance) – a level last seen coming off the internet bubble.   By any measure, this market trades exceedingly rich. But the economy's trajectory could justify that richness.   Unemployment remains low at 4.2%.   U.S. economic growth has been growing steadily between 2.5% to 3%, quarter after quarter. Falling interest rates, both short-term (Federal Funds Rate) and long-term (10-Year Yield), favor growth. Consumer confidence continues to improve. And, as Bloomberg reports, optimism for small business owners has soared.   Capital won the election. And the remarkable market optimism of the last few weeks reflects bullishness from the bottom up.   The fact is companies now want to invest in growth.   AI has poured billions in CapEx (business investment) into the productive economy. And those investments already show a payoff for leading tech companies.   Nothing powers an economy like business investment. It creates jobs—those jobs power consumption. And the promise of a dramatically lower regulatory environment will renew investment in oil and gas, LNG and LPG exports, and frontier industries like robotics, self-driving cars, and the commercialization of space.   A final factor, a sort of one-two punch, could help the market sustain this momentum — lower federal deficits and inflation.   It's a powerful combination of forces that, along with continued economic growth, could substantially melt the federal debt burden and create even more room for bottom-up business investment.   I'll have more on that tomorrow.   Until then… Think Free. Be Free.   Don Yocham, CFA Managing Editor of The Capital List   66 West Flagler Street STE 900 Miami, Florida 33130 United States   Click Here to Unsubscribe **Our gurus teach skills others have used to make money. Any results displayed are extraordinary and are not typical and will vary from person to person. For more info read our Earning Claims Disclosure   About: Making money trading stocks takes time, dedication, and hard work. My goal is to teach you how I have succeeded in the market, but you may not achieve my results. Remember, there are risks involved with investing, including the potential loss of money.   We are strongly committed to protecting your privacy and providing a safe & high-quality online experience for all of our visitors. We understand that you care about how the information you provide to us is used and shared. We have developed a Privacy Policy to inform you of our policies regarding the collection, use, and disclosure of information we receive from users of our website.   Our Privacy Policy, along with our Term & Conditions, governs your use of this site. By using our site, or by accepting the Terms of Use (via opt-in, checkbox, pop-up, or clicking an email link confirming the same), you agree to be bound by our Terms & Conditions and our Privacy Policy.   If you have provided personal, billing, or other voluntarily provided information, you may access, review, and make changes to it via instructions found on the Website or by replying to this email. To manage your receipt of marketing and non-transactional communications, you may unsubscribe by clicking the "unsubscribe" link located on the bottom of any marketing email. Emails related to the purchase or delivery of orders are provided automatically – Customers are not able to opt out of transactional emails. We will try to accommodate any requests related to the management of Personal Information in a timely manner. However, it is not always possible to completely remove or modify information in our databases (for example, if we have a legal obligation to keep it for certain timeframes, for example).   If you have any questions, simply reply to this email or visit our website to view our official policies.