Stocks Go Higher On Earnings Growth, Interest Rate Cuts & GDP Explosion
To investors,
It is fascinating to me that some people still believe there is a negative outlook for the United States, our economy, and our public equities. The data seems overwhelming that we are living through a tech-enabled economic boom that is creating more efficient and profitable companies.
This is the dream for investors, executives, economists, and citizens. But so many people from the traditional financial system remain pessimistic. They continue to predict some large calamity right around the corner. Maybe I am completely losing my mind, but I just don’t see what they are talking about.
Let’s dig into the data.
Carson Group’s Ryan Detrick writes “Since 2019 the S&P 500 is up 125%. 76% of that is coming from earnings growth and 19% from dividends. No, this isn’t a bubble, this rally is justified from strong earnings growth.”
This is very important because it highlights that the rapid rise in US equities is being driven by strong fundamentals. Quite literally, the companies are becoming more valuable, rather than stock appreciation due to some market mania that is unsustainable.
But you shouldn’t be surprised — there is nothing new here.
Creative Planning’s Peter Mallouk points out “150 years of history. Wars. Depressions. Pandemics. Crashes. Each one felt like the end of the world. And yet, $1 in stocks still grew to $33,000, AFTER adjusting for inflation. The story of markets is the story of human progress.”
The optimism doesn’t come exclusively from the stock market either. The Atlanta Fed’s GDPNow forecast is currently predicting nearly 4% growth for Q3 2025.
And don’t forget that central banks are adding fuel to the fire now. Global Markets Investor writes “Global central banks are cutting interest rates as if there is a recession: 82% of world central banks have cut rates over the last 6 months, the highest share since the 2020 crisis.”
So you have earnings growth, GDP surging higher, and central banks lowering the cost of capital rapidly. Each of those things should contribute to higher stock prices unilaterally, but combined they become a cocktail for an economic boom.
If that cocktail gets the party started, the night cap will be the fact that hyperscalers are currently investing 60% of their operating cash-flow on Capex.
Maybe you believe the world’s largest companies are run by morons who are just lighting their cash on fire, but more likely we are watching these massive investments lay the groundwork for a continued economic boom that will be breathtaking to experience.
As I mentioned at the start, I just don’t see the situation the pessimists are worried about. It all seems like noise to me. Time will tell whether I am being naive or not. I like my chances though.
Hope everyone has a great day. I’ll talk to you tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Jordi Visser Explains Why Bitcoin & Artificial Intelligence Will Drive The Bull Market
Anthony and John Pompliano discuss why bitcoin’s price is not going up faster, what is going on with gold, how Wall Street is embracing crypto public equities, how we fix economic data, and should we be worried about the government shutdown?
Enjoy!
Podcast Sponsors
Figure – Lowest industry interest rates at 8.91% at 50% LTV and 12 month terms! Take out a Bitcoin Backed Loan today and buy more Bitcoin. Check out Figure and their Crypto Backed Loans! Figure Lending LLC dba Figure. Equal Opportunity Lender. NMLS 1717824. Terms and conditions apply. Visit figure.com for more information.
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
Bitizenship – Get EU citizenship through Portugal’s Golden Visa, maintaining Bitcoin exposure. Book a free strategy call at bitizenship.com/pomp.
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed bank that integrates traditional finance and Bitcoin. Earn up to 3.9% interest in BTC. Spend globally with a debit card that gives 1% cashback in BTC. Borrow up to $1M instantly with Bitcoin-backed loans.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit Simple Mining here.
Core - Earn trustless Bitcoin yield. No bridging. No lending. Just HODLing. Begin Staking Your Bitcoin.
BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.
Polkadot is a scalable, secure, and decentralized blockchain technology aimed at creating Web3. Innovation leader, making it a preferred choice for big names.
🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you.
You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.
Earnings and rate cuts can fuel the stock market for a while. But beneath the surface, debt is compounding faster than growth.
That’s why equities inflate.
That’s why Bitcoin exists.
Of course the market will boom. The dollar is being debased at a historic pace. Same stocks, twice the money supply equals higher stock price. What do higher earnings and dividends mean if they buy half the things they would before? The real inflation rate is much higher than what is reported.