BlackRock chief investment officer Rick Rieder believes that the bull run in US equities will continue, driven by higher earnings estimates.

In a new interview at the CNBC CEO Council Summit, Rieder says the market is in the midst of an “extraordinary period of time” as stock prices rise while earnings multiples fall.

While Rieder mentions a few market risks, he says the earnings growth story is fueling the market’s ascent to new all-time high levels.

“I don’t think we’ve ever seen anything like this in terms of you’ve got a market that’s doing extremely well. The cash keeps coming into these markets. And the multiples, though, when you actually look at it relative to where you were, particularly in tech and semis, are actually lower than where we were if you go back to October.

The earnings growth, I was looking this morning at the projected [one-year forward] earnings growth, talking about 20%-plus earnings growth. That is incredible. So yes, there’s a lot of uncertainty. Yes, there are things to be careful about. I worry about crowding in different markets, not just in overall markets, but in single-name stocks where you see more crowding, more momentum trading than I’ve ever seen before.”

The BlackRock CIO says he’s keeping a close watch on the Magnificent 7 names, highlighting that their valuations are justified due to exceptional earnings growth.

“I was looking at the Mag 7. I mean, you’re talking about a 26x multiple for companies that are throwing off earnings growth of 30%-40%.

So yes, there’s a lot of uncertainty. There’s a tremendous amount of cash. There’s a tremendous amount, even with the IPO calendar, which is large. There is still a tremendous amount of buyback going on. So I think the technicals are good. Listen, I think you’ve got to stay in it. And I think the equity market will probably continue to do okay.”

Follow us on X, Facebook and Telegram

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Surf The Daily Hodl Mix

Generated Image: Midjourney

Source link

A Bank of America strategist is sounding the alarm about the stock market, warning that equities are flashing signals that have often foreshadowed a 20% correction.

In an investor note, BofA’s head of US equity and quantitative strategy, Savita Subramanian, urges investors to “take profits,” warning that she’s seeing “too many red flags” in the market, reports Axios.

“Our bear market signposts — the triggers that typically precede an S&P 500 peak — suggest additional caution may be warranted. Today, 70% of our signposts are triggered, in line with the average observed in prior market peaks.”

Subramanian says the signposts are market condition gauges, including the investor assumption that companies will continue to generate profits at a strong pace in the coming years, as well as relaxed credit conditions. She also highlights that she’s seeing very high dispersion in the performance of stocks with high and low price-to-equity ratios, meaning high-valuation stocks are being rewarded, while low-valuation stocks are being left behind.

“Dispersion has been most pronounced within Tech, where the spread between the best/worst-performing quintiles’ median stock is a whopping +120 [percentage points], the highest since Feb. 2000, which reached +130 [percentage points] ahead of the market peak of March 24, 2000.”

Meanwhile, Morgan Stanley CIO Mike Wilson says he doesn’t believe that the stock market will enter bear territory. He says, “In our view, a correction was inevitable and ultimately healthy if this bull market is going to extend into year-end, which remains our baseline.”

Follow us on X, Facebook and Telegram

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Surf The Daily Hodl Mix

Generated Image: Midjourney

Source link