David Kelly, Chief Global Strategist of JPMorgan Asset Management, says there is only one god of the stock market and that is future earnings growth. He believes this year's strong earnings growth will push the market higher in 2018. The biggest threat he sees to equities is a substantially worse trade conflict. Following is a transcript of the video.
Sara Silverstein: And what's your outlook for the markets? Do you think that the US stock market is expensive right now?
David Kelly: No, I think the US market is okay. I mean, it's had a sort of rocky kind of year, and I think the reason for that is people have a hard time appreciating just the earnings we're receiving right now. The problem is, I think stock market investing is kind of a monotheistic religion; there's only one god, and that is future earnings growth. And the thing is, you cannot see much future earnings growth from here. Next year it's going to be tougher than this year. But look how good it's this year. I mean, this year we think we're going to do about 26% year-over-year growth in operating earnings per share for the S&P 500. That's extraordinary in the tenth year of a bull market in equities. And it's like you're getting five years' of earnings growth packed into this year. So I think we should appreciate, and I think investors eventually will appreciate, just how good these earnings are right now, the ability of companies to earn this cash, to distribute this cash, that should push the market up. And I think the market, barring some worse trade conflict, I think the market will probably move up between now and the end of the year.
See the rest of the story at Business Insider
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