You can catch Trader Talk on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts. Investors who can stay patient may have the real edge heading into 2026. On Trader Talk, Kenny Polcari sits down with Truist (TFC) Chief Investment Officer and Chief Market Strategist Keith Lerner to break down what surprised him most in 2025 and why resilient corporate profits kept this bull market alive. Lerner outlines a “weight of the evidence” outlook for 2026, encompassing the labor market, Fed rate-cut e ...

Core Viewpoint - Oppenheimer predicts that the S&P 500 will continue to advance in 2026, driven by a resilient economy and strong corporate profits [1] Economic Outlook - The economy is expected to remain robust, contributing positively to market performance [1] - Corporate profits are likely to sustain their strength, further supporting the S&P 500's growth trajectory [1]

Market Trends & Bull Market Drivers - The bull market is driven by higher corporate profits and higher profit margins [3][6] - S&P 500 third quarter earnings are expected to be up approximately 8%, but are currently tracking over 13% year-over-year [4] - Over 80% of companies have exceeded expectations [5] - Profit margins are currently at new cycle highs [5] - A global bull market is underway, with European financials reaching all-time highs [17] Investor Sentiment & Market Indicators - Despite the bull market, the Fear and Greed index indicates that investors are fearful [18] - The American Association of Individual Investors sentiment poll has shown more bears than bulls this year, a rare occurrence historically associated with down years [20] - The S&P 500 has traded within 3% of its all-time high for five consecutive months [31] - Historically, when the S&P 500 is up 10% year-to-date going into November, the last two months of the year tend to be positive [35][37] - S&P 500 companies with more than 50% of their revenue from overseas are experiencing better earnings, with earnings up 14% compared to the overall S&P 500 earnings increase of 131% [41][42] Fed Policy & Economic Factors - The market anticipates the Fed will likely cut rates in December [52] - Historically, when the Fed cuts rates within 3% of an all-time high, the S&P 500 is higher a year later 21 out of 21 times, with an average increase of 14% [53]

Market Overview - U.S. stock futures showed mixed movements following a positive trading session on Monday, where benchmark indices reached new records due to successful trade negotiations with China [1] - The Federal Reserve is expected to announce a decision on interest rates, with a 97.8% likelihood of a cut in the October meeting [2] - Major indices' futures showed slight declines for Dow Jones and S&P 500, while Nasdaq 100 saw a minor increase [2] Company Earnings and Performance - United Parcel Service (UPS) is expected to report earnings of $1.31 per share on revenue of $20.83 billion, with a short-term stronger price trend but weaker medium and long-term trends [5] - UnitedHealth Group (UNH) anticipates earnings of $2.81 per share on revenue of $113.06 billion, showing a strong medium and short-term price trend but weaker long-term performance [5] - Cameco Corp. (CCJ) rose 9.67% and Brookfield Asset Management (BAM) advanced 3.52% after announcing a partnership with the U.S. Government for $80 billion in new nuclear reactors, maintaining a strong price trend [5] - 3D Systems Corp. (DDD) gained 9.45% due to significant milestones in its Saudi joint venture, indicating a strong price trend across all time frames [5] - Waste Management Inc. (WM) shares dropped 2.51% after reporting weaker-than-expected third-quarter results, maintaining a poor growth ranking [6] Sector Performance - Information technology, communication services, and consumer discretionary sectors recorded the biggest gains, contributing to a positive close for most sectors on the S&P 500 [7] - Consumer staples and materials sectors, however, closed lower, bucking the overall market trend [7] Analyst Insights - Professor Jeremy Siegel highlighted robust corporate profits as a key driver for the market, expecting a 25-basis point cut from the Federal Open Market Committee [9] - Siegel noted that earnings are strong and the real economy looks good, despite some tariff-related price noise being temporary [10] - Cautious market sentiment persists, with positioning remaining hedged and skeptical, which Siegel views as a healthy sign for future growth [11]

Canada’s stock rally appears likely to get a boost from corporate profits, with Scotiabank predicting that the earnings of the biggest publicly traded companies may have jumped to another record during the third quarter https://t.co/br7lkUNcrV ...

Market Outlook - Bull market is expected to continue due to economic growth, resilient corporate profits, and supportive policy [1] - Missing a bull market can be very costly for investors [1][2] - The S&P 500 has increased by 89% since the beginning of the current bull market [2] - The average bull market gains 192% since 1950, suggesting potential for further growth [3] - Historically, the average gain for the S&P 500 in year four of a bull market is 162% [4] - If the historical average gain of 162% is applied, the S&P 500 could reach around 7710 [5] - Seven out of the previous ten bull markets extended beyond three years [5] Investment Strategy - Investors should focus on capturing upside rather than excessive hedging [2] - Retail investors accelerated their weekly stock purchases, with net purchases at $7 billion this week, above the two-month average of 53% per week [8] - Retail investors are favoring ETFs over single stocks [8] - A strong finish to the year is expected, potentially extending into April of next year [11][12]

Group 1 - Corporate profits have reached record levels in the financial industry following the pandemic, driven by a surge in free money [2] - In contrast, the auto manufacturing sector is experiencing significant losses, indicating a divergence in profitability across industries [2] - The measure of corporate profits discussed refers to pre-tax profits, highlighting the financial health of companies in various sectors [2]

Core Insights - The potential return to a high-tariff regime in the U.S. has sparked significant alarm among economists and financial experts, with dire predictions about its economic consequences [3][4]. - Despite initial fears, the actual negative impacts of the tariff policies have been mild or nonexistent so far, with various economic indicators showing resilience [4][38]. Inflation Impact - Initial assumptions suggested that tariffs would lead to higher inflation, but the reality is more complex, with tariffs likely causing a one-time price hike rather than ongoing inflation [6][7]. - Tariff revenues for 2026 are projected to be around $300-400 billion, representing only about 1% of total U.S. GDP, akin to a national sales tax increase [7]. - A study indicated that only 17% of the components in the Core Personal Consumption Expenditure Index are affected by tariffs, suggesting a limited overall impact on inflation [7][8]. - The Consumer Price Index (CPI) showed a year-over-year increase but remained below the two-year average, indicating stability in prices despite new tariffs [11][12]. Recession Concerns - Recession forecasts fluctuated significantly in the first half of the year, but by July, sentiment improved, with the S&P 500 achieving 32 new record highs since "Liberation Day" [15][19]. - GDP growth surged at a 3.3% annual pace in the second quarter, and consumer spending showed a year-over-year gain of 4.7%, indicating economic strength [15][17]. - Most economists surveyed have reduced their recession probability forecasts, with only 2 out of 52 seeing an increased risk [16][18]. Treasury Bond Market - Contrary to fears, the U.S. Treasury Bond market has remained stable, with the 10-year Treasury Bond yield lower than on "Liberation Day" and bond prices increasing by almost 6% since the beginning of the year [20][21]. - Investors have shown confidence in U.S. Treasury securities, even as public debt reached $30 trillion, with tariffs projected to generate approximately $3.3 trillion in revenue over the next decade [21]. Dollar Status - Predictions of a weakened dollar and loss of its reserve currency status have not materialized, with the dollar remaining dominant in international trade and finance [22][24]. - The Federal Reserve's report indicated that the dollar's share of international payments is about 50%, showing stability in its global position [25]. Foreign Investment Trends - Foreign ownership of U.S. Treasury bonds has increased since April, with foreign investors returning as significant buyers of U.S. assets [26]. - The trend of foreign investment in U.S. equities and Treasury bonds has intensified, countering initial fears of a mass exodus [26]. Global Trade Dynamics - Concerns about permanent damage to global trade networks due to tariffs have not been realized, with global trade growing by $300 billion in the first half of 2025 [28][29]. - U.S. trade volumes were higher in July than in any month in 2023 or 2024, indicating resilience in trade despite tariff implementations [29][30]. Supply Chain Stability - Initial fears of supply chain disruptions have not come to fruition, with container shipping costs falling and supply chain pressure levels returning to long-term averages [32][34]. - Companies have adapted to potential tariff impacts by improving supply chain management and resilience, mitigating risks associated with tariffs [34]. Corporate Profitability - Contrary to expectations of declining corporate profits due to tariffs, S&P 500 companies reported a 6.4% revenue increase and an 11.9% earnings growth in the second quarter [36][37]. - The majority of U.S. companies exceeded analysts' earnings estimates, indicating strong corporate performance despite tariff concerns [36][37].

Fiscal Policy & Economic Growth - The analysis suggests tariffs are running at an annual rate between $400 billion and $500 billion, potentially improving the deficit, but real GDP growth is considered the key to significantly reducing the deficit as a percentage of GDP [1] - The report anticipates real GDP growth will surprise on the high side of expectations later in the year and into 2026, driven by innovation platforms like robotics, energy storage, AI, multiomic sequencing, and blockchain technology, all catalyzed by AI [1] - The analysis highlights deregulation, particularly in crypto, AI, and nuclear energy, as a significant factor for economic growth, with tax changes encouraging manufacturing and innovation through accelerated depreciation schedules and full expensing of equipment, R&D, and software [1] Inflation & Monetary Policy - The report indicates that while inflation may seem stuck in the 2% to 3% range, innovation-driven productivity gains could lead to deflation in the coming years [2] - The analysis points out that M2 money supply growth has significantly dropped compared to the COVID boom, and the velocity of money is declining, potentially diffusing inflationary pressures [2] - The yield curve, measured by the two-year Treasury yield relative to the three-month Treasury yield, indicates tight monetary policy, which is expected to have disinflationary or deflationary effects [3] - True inflation CPI is reported at 19%, even with tariffs factored in, and consumer inflation expectations are expected to decline [3] Market Indicators & Investment Strategy - The analysis notes that manufacturing has been contracting for the last three years, and services are not in great shape, signaling potential economic concerns [4] - The report highlights that AI-powered capital spending is increasing, supported by new tax rules, while the trade deficit is being addressed [5] - The analysis observes that pending home sales are deteriorating, and new home inventory is high, potentially leading to price cuts and impacting the CPI [5] - The report suggests that the return on investment in the US is expected to increase due to innovation, tax laws, and deregulation, potentially strengthening the dollar [5] - The analysis notes that corporate profits are healthy, but quality of earnings and harnessing new technologies will be crucial for future growth [5] - The report observes that commodity prices are going nowhere, and gold is breaking out to all-time highs relative to metals, possibly signaling deflationary concerns [5]

Economic Sentiment - Despite strong corporate profits this earnings season, American sentiment remains gloomy [1] Potential Areas for Further Research - The report suggests exploring the reasons behind the disconnect between corporate financial performance and public sentiment [1]