Markets keep climbing despite higher rates because earnings are robust and GDP growth is running well above the 10-year average. The engine? Consumer spending plus heavy capital expenditure from corporations pouring money back into the economy.
This is the classic setup where fundamentals temporarily override rate headwinds. Strong earnings can justify higher multiples for a while — until they can't. The question isn't whether growth is real today (it is), but how long it lasts and what multiple you're paying for it.
Capex booms are double-edged. They fuel near-term growth but often lead to overcapacity and margin compression down the road. The consumer has been resilient, yes, but debt levels and savings rates tell a more nuanced story.
Enjoy the ride, but remember: valuation is what you pay, growth is what you get. When the music stops, the price you paid matters more than the story you believed.
This is the classic setup where fundamentals temporarily override rate headwinds. Strong earnings can justify higher multiples for a while — until they can't. The question isn't whether growth is real today (it is), but how long it lasts and what multiple you're paying for it.
Capex booms are double-edged. They fuel near-term growth but often lead to overcapacity and margin compression down the road. The consumer has been resilient, yes, but debt levels and savings rates tell a more nuanced story.
Enjoy the ride, but remember: valuation is what you pay, growth is what you get. When the music stops, the price you paid matters more than the story you believed.