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Yes GDP Can Grow at 4 Percent
It has been nearly a decade since we had real economic growth in this economy. In fact, it has been nearly two decades. Tax reform and deregulation really can drive growth and it can in a big way. One percent in GDP growth is just $170 billion more in production per year. Do you really believe the economy is a two percent economy forever? I don’t. I find it hard to believe the economy can’t grow at 3 or 4 or even 5 percent again. Adding $170 billion to the economy doesn’t seem all that hard of a task, in the grand scheme of a $17 trillion economy.
Stock Prices Continue To Grind Higher
The S&P just continues to move higher, after breaking out late last week. Some investors seem to be scratching their head’s wondering just what it is going on? How can the market still be going up? It is called growth. Growth is a fantastic thing, and as long as the economy can continue to expand and earnings can continue to grow, the stock market can continue to rise.
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 Improving Economy
Take a look at the ISM Purchasing Manager’s Index…It looks like the highest reading in a decade.
ISM Purchasing Managers Index data by YCharts
ISM Non-Manufacturing Index…
ISM Non-Manufacturing Index data by YCharts
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It Is About GDP Growth
Just take a look the reading of GDPNow for the third quarter from the Atlanta Fed stands at 2.8 percent.
If the economy keeps improving, then the markets will continue to rise, There has been a definite turn in the economy that occurred in the second half of 2016.
US Real GDP Growth data by YCharts
There are other reasons why. Look at the growth in revenue and expected growth of the FANG’s, it tells the story. Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month
FB Revenue (TTM) data by YCharts
It Earnings
Does one need more evidence than the following chart…
S&P 500 Earnings Per Share TTM data by YCharts
’nuff said.
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Disclaimer:
Michael Kramer and the Clients of Mott Capital own shares of GOOGL and NFLX
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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Mott Capital's Market Chronicles January 10, 2025 12:02 PM