Welcome back from Labor Day weekend, investors. The shortened trading week is packed with inflation data, much-anticipated earnings from Oracle and a continued swirl of questions around the Fed’s next move.
None of that, though, is likely to do anything to derail the fundamental story driving asset prices.
It’s a global bull
Investors have plenty to worry about but earnings won’t stop confirming that the bull market is intact.
S&P 500 companies have reported absurd and record earnings this year and that strength has actually made stocks cheaper today compared to the start of the year.
In the second quarter, the S&P 500 earnings per share rose 50.7%, up from 19% in the first quarter.
While a portion of that includes mark-to-market investment returns, earnings still rose 25% without them.
Meanwhile, forward earnings rose to a record $401.75 a share last week — despite the ongoing conflict in Iran and elevated energy prices, uncertainty with the Fed, and looming midterm elections.
The fundamentals have been so impressive that veteran economist and prominent market bull Ed Yardeni said Sunday he might soon have to raise his 8,400 S&P 500 year-end target, which is already the highest on Wall Street.
Indeed, valuation multiples continue to contract while earnings improve.
S&P 500 forward price-to-earnings have fallen 12% since the start of the year even as stock prices have gained about 13%.
But this isn’t just a story of American exceptionalism.
The same pattern is unfolding around the world.
The MSCI All Country World ex-US index trades at a 13.1x forward P/E, below the 19.8x for the US MSCI. Both those figures have declined sharply since January, as data from Yardeni Research shows.
For the first time in years, the case for owning stocks outside the US relies on the same calculus as the case for owning them at home.
Earnings are doing the heavy lifting everywhere.
Elsewhere
🚢 Iran said a Strait of Hormuz deal is on the table. Tehran signaled openness to de-escalate shipping tensions in exchange for sanctions relief talks. (Bloomberg)
🤖 Jensen Huang said artificial general intelligence has arrived. Those comments followed OpenAI’s release of GPT-6 Astra, a model that was trained on more than 100,000 Nvidia Grace Blackwell systems. (Yahoo Finance)
🛢 Goldman Sachs sees upside risk of $120 oil. Sustained disruption from the Iran conflict could push Brent well past the bank's previous ceiling within months. (Bloomberg)
Rapid-fire
Labor Day weekend gas prices have never been higher (USA Today)
Bloom Energy is set to join the S&P 500 (Yahoo Finance)
Investment chief Ryan Detrick shares his 3 favorite sectors to buy right now (Full Signal)
South Korea and US agree to expand their energy trade cooperation (Reuters)
This bitcoin miner turned data-center play could surge 53% (Best Ideas Club)
Huawei and Xiaomi debut new smartphones ahead of Apple's iPhone 18 launch (Yahoo Finance)
Sugar is outperforming the US stock market this year (CNBC)
Americans without college degrees are seeing one of the strongest job markets in years (WSJ)
On this day
🗓 September 8, 2008: The Dow surged 2.6% to 11,510.74 the trading day after the Treasury seized Fannie Mae and Freddie Mac, briefly convincing Wall Street a global financial crisis had been averted.
Last thing
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