Good morning, investors. Stocks soared to start the week after President Trump rang the opening bell for both the New York Stock Exchange and the Nasdaq from inside the White House, marking the launch of Trump Accounts for millions of children.

Let’s talk bubbles.

The investors fretting another dot-com collapse seem to be fixated on price instead of earnings.

The S&P 500 is now trading at a cheaper forward valuation than it was at the start of the year, even as bearish commentators continue to sound the alarm on a potential market bubble. 

While traditional valuation metrics have their shortcomings, the market has indeed come down, according to its forward price-to-earnings ratio. 

The benchmark index has gained more than 9% year-to-date, yet its forward P/E actually fell from 22.2x to 20.4x.

Earnings estimates have grown roughly twice as fast as the index itself, which means fundamentals are steering the cheapening, not fear or negative sentiment. 

Typically, a shrinking multiple signals falling prices and selling pressure. But in recent months it reflects a surging denominator in the price-to-earnings ratio.  

Put another way, the stock market currently trades at the same multiple as it did in May 2024, yet the price of the S&P 500 is more than 40% higher.

That’s two years of returns fueled by earnings growth rather than multiple expansion. 

So even though the market costs more right now, earnings are growing so fast that stocks are trading at a better value than they were previously. 

Now, as Opening Bell Daily has covered, these numbers rest on analyst forecasts that have been revised higher at an aggressive clip.

Forward multiples are only as reliable as the expectations they are built on. 

Right now Wall Street expects S&P 500 earnings to grow nearly 20% over the next 12 months, which is about double the 10-year average.

Should analysts start to trim those estimates, the index’s valuation could snap right back to its recent highs without any movement on price.

But until that happens, the bubble investors keep talking about keeps getting cheaper.

💰 Trump Accounts are now live. The government-sponsored investment account for children are now available for download on app stores and they will be automatically invested in a S&P 500 index fund from State Street. (Yahoo Finance)

🤖 SK Hynix is about to see the biggest foreign IPO ever. The South Korean memory chipmaker plans to raise about $29 billion through a Nasdaq secondary listing under ticker SKHY, aiming to surpass Alibaba's $21.8 billion 2014 debut as the largest ADR on record. (Fortune)

🛢 OPEC+ agreed to another oil output hike from August. The group added 188,000 barrels a day to its quotas as Strait of Hormuz shipping is gradually normalizing, taming concerns over energy-driven inflation. (Reuters)

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🗓 July 7, 2008: IndyMac Bancorp disclosed to the SEC that Senator Chuck Schumer's public letters had triggered a deposit run of more than $1.3 billion in two weeks. The bank collapsed four days later in what was then the second-largest US bank failure in history.

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