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Speaker 1: Bloomberg Audio Studios, podcasts, radio news, single best idea and

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Speaker 1: we could have had many voices today. Very strong, strong

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Speaker 1: Monday for the end of August. The team just did

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Speaker 1: a great job getting smart conversations. Henrietta Trees was just

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Speaker 1: on fire in studio with Veda partners on the political

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Speaker 1: moment of the nation. But without question, the conversation of

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Speaker 1: the day it was with a great optimist, Edward Yard

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Speaker 1: Denny of your Denny Research. There's two ways to look

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Speaker 1: at this. The first is that I was at Jackson

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Speaker 1: Hall and I spent more time there than ever ever,

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Speaker 1: ever talking about nominal GDP, the combination of real GDP

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Speaker 1: and inflation. So if you have buoyant nominal GDP, is

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Speaker 1: it because you're getting real economic growth over inflation, or

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Speaker 1: you have the same nominal GDP from Okay economic growth

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Speaker 1: but more buoyant, larger inflation. Here's Edgyar Denny on how

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Speaker 1: it doesn't.

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Speaker 2: Matter revenues or revenues. The PE times is done in

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Speaker 2: nominal terms, and the E is in nominal terms, so

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Speaker 2: that's correct. We look at revenues and then we look

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Speaker 2: at earnings, and the implication is profit margins and what

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Speaker 2: we see in the data is that the first and

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Speaker 2: second quarter earnings were remarkably strong, much stronger than expected.

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Speaker 2: They usually is a positive earning surprise, but there was

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Speaker 2: particularly strong in both quarters. And now during the second quarter,

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Speaker 2: we have earnings on the S and P five hundred

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Speaker 2: at an all time record high, and no wonder the

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Speaker 2: stock market is an all time record high. Of course,

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Speaker 2: it helps that the valuation multiple is elevated at twenty two,

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Speaker 2: but I'm thinking the bill market cantinues here on earnings,

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Speaker 2: and I think that earnings will continue to push stock

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Speaker 2: prices higher.

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Speaker 1: Late in our conversation, ed Yard Denny extrapolating out but

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Speaker 1: in a very sound, not mathematical, but almost fundamental basis.

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Speaker 1: This is the first time I've ever modeled this. While

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Speaker 1: ed was talking, and I think Paul Sweeney saved me

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Speaker 1: and had a brilliant question. I was on the Bloomberg

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Speaker 1: doing the interpolation of if you have a certain number

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Speaker 1: for the standard and pores five hundred, it's mathematically better index.

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Speaker 1: But if you bring that over to what we're wedded to,

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Speaker 1: which is the Dow Jones Industrial average, what number do

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Speaker 1: you get. Let's listen to Edgar denny on the standard

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Speaker 1: and pores five hundred end of decade.

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Speaker 2: If you just kind of take normal assumptions of what

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Speaker 2: the economy can deliver and has delivered in the past,

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Speaker 2: you get to ten thousand on the S and P

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Speaker 2: five hundred by the end of the decade. That's the

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Speaker 2: end of twenty twenty nine. And the assumption there is

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Speaker 2: that earnings expectations get up to four hundred dollars a share.

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Speaker 2: And again, that's all pretty straightforward, consistent with the kind

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Speaker 2: of growth, right of six seven eight percent that we've

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Speaker 2: seen in earnings over the years. And if we get

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Speaker 2: better than that, the market I could very well close

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Speaker 2: even higher than that.

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Speaker 1: I can't convey how lonely that discussion is. That's the

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Speaker 1: first time I've heard SPX ten thousand, by let's call

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Speaker 1: it twelve thirty one, twenty nine. I've never thought about

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Speaker 1: twenty twenty nine. I'll be like sixty seven years old then.

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Speaker 1: But what it comes down to is what does that

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Speaker 1: mean for the Dow? And the answer is SPX ten

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Speaker 1: thousand is in the vicinity of Dow seventy. I've never

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Speaker 1: framed that. I got to go back and do more

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Speaker 1: work on this we'll be here all week. Exciting week

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Speaker 1: to say the least. On podcasts on Apple, on Spotify,

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Speaker 1: on YouTube podcasts, a single best idea