Stocks Are Expensive, QE Is Back, and GDP Is Booming — This Is the Market Paradox

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Lock In Your 5% Rate Today To investors, The Federal Reserve will begin buying back $40 billion in US treasuries starting today. The purchases are planned to happen over the next 30 days and signal a return to quantitative easing from the central bank. Historically, the introduction of QE has been very bullish for investors. But this policy shift is happening at a very interesting time. Creative Planning’s Charlie Bilello writes “investors are now paying 26.2 times peak S&P 500 earnings, the highest valuation we’ve seen since 2000 and over 50% above the historical median. A decade ago this same ratio was at 16.8.” These valuation levels will obviously make some investors nervous if they compare them to the last few decades. Mike Zaccardi and Torsten Slok show “the historical relationship between the S&P 500 forward P/E ratio and subsequent 10-year annualized returns shows that investors should expect to get zero in return in the S&P 500 over the coming decade.” Again, investors are looking to capture a return. They don’t want to hear about an expected return of zero for the next decade. Thankfully, these negative predictions are being met with lots of positive news. E.J. Antoni explains the Atlanta Fed now has the “Q3 GDP estimate increased to 3.6% as exports revised higher, offsetting downward revisions to investment and government. It’s very good news that government purchases might come in flat for the first 9 months of 2025 - that’s incredible progress.” And Commerce Secretary Howard Lutnick was on television yesterday predicting GDP growth could reach as high as 6% under the Trump administration’s policies. He said : “Real GDP growth! Not 2% nonsense. This $30T economy can grow 4%, 5%, and under President Trump, you’re gonna see it grow 6%!!…People think, it’s impossible? Lower rates, lower energy, you have that growth, you’re gonna fix America.” Time will tell whether Lutnick is right or not. Regardless of the long-term accuracy, it is very clear that certain economic points have been improving. Adam Kobeissi shows “US rent prices declined -0.2% MoM in November, to $1,706, recording the largest November drop in at least 15 years. This also marks the 5th consecutive month of flat or negative rent changes.” That is a big narrative violation. It is these positive developments in the economy that give firepower to Lutnick and others to go on offense against the establishment leaders who have the perception of holding back growth. In that same interview yesterday, Lutnick went on a rant about Jerome Powell saying: “Jay Powell is too afraid to lead the greatest $30 trillion economy in the world. We should be leading with our front foot. Instead we are always leaning back as if something bad is happening. We are doing great. Nothing bad is happening. Greatness is happening. We’re growing 4% GDP! Come on.” Regardless of your politics, it is clear that two things are happening: the US economy is experiencing a boom in GDP growth, while stocks continue to surge higher amid worries about future returns available to investors. There is significant disagreement about what is going to happen in the coming months and years. That is how markets get made though. You need bulls and bears. Buyers and sellers. One thing I know to be true though…the optimist tend to come out on top. Hope you all have a great end to your week. I’ll talk to everyone on Monday. - Anthony Pompliano Founder & CEO, Professional Capital Management Why Bitcoin’s Next Big Move Is Closer Than Everyone Thinks Mel Mattison is one of the leading macro strategists on the internet, known for his deep insights into global markets and digital assets. In this conversation, we break down why inflation fears are overstated, why rates may fall faster than expected, and how energy and politics are shaping today’s markets. We also cover the rise of young independent investors, growing distrust in institutions, and what all this means for bitcoin, stocks, housing, and the AI-driven economy ahead. Enjoy! Podcast Sponsors Figure - Need liquidity without selling your crypto? Figure’s Crypto-Backed Loans allow you to borrow against your BTC, ETH, or SOL with 12-month terms and lowest rates in the industry at 8.91%. Access instant cash or buy more Bitcoin without triggering a tax event. https://figuremarkets.co/pomp Abra - This podcast is sponsored by Abra. Abra is the secure way to access crypto and crypto based yield and loan products through a separately managed account. www.abra.com. Bitizenship – Get Italian Residency with €250k investment in Bitcoin Startup Italy , maintaining Bitcoin exposure. 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