The Most Hated Bull Market In History Is Far From Over

0:00What's going on guys? Today we've got a great treat for you. I'm sitting down with Carson Group's Ryan Dieter. He's going to explain why all of the bears are wrong about the U.S. stock market. He's going to explain why the bull market is just beginning, the bears are going to be in tears, and stocks are going much higher over the coming months. We are live today from the desk of Anthony Pompliano.

0:29Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on this YouTube channel. We currently are at 37 ,654 subscribers, but with your help, we'll get to 1 million. Hit that button, subscribe today, and let's get into the show. All right, Ryan, I thought a great place to start is all of these people are pessimistic. They're all bears. They're yelling and screaming about how the end of the world is coming. You have made a fantastic case why the bull market is just starting. Help us understand this idea of higher profits and higher profit margins being a major driver of this bull market.

1:03Yeah, first off, thanks for me backing, Anthony. I appreciate this. So people talk about bubbles and all this and that. But what really drives long-term stock gains? To us, it's corporate profits, right? We're wrapping up earnings season. At the start of earnings season, that was like October 1st, by the way, right when the government shut down. S &P 500 third quarter earnings are supposed to be up about 7.9%. We'll just call it 8%, right, year over year. It's coming in over 13 % right now, Anthony. I mean, just in the last week and a half, it went from like about 11 to 13. And so it's not just tech.

1:34Believe me, tech's done great. Had some great earnings. Financials are actually one of the biggest winners from what was expected to where it is. Over 80 % of companies a beat. And on revenue, we'll talk about profit margins for a second. I mean, profit margins hit new cycle highs right now, right? This cycle right now. And we've called these the dual tailwinds to bull market for over two years now at the Carson Group. when profits are going up and profit margins are going up, those are going to continue to push this bull market higher. When will it end? Listen, I don't know. I mean, but the truth, I think the economy is a little better.

2:01People keep giving it credit. We don't think it's going to end anytime soon. Now, when you look at this, I think a big part of it is just the companies are more valuable, to your point about higher profits, higher profit margins. Are there cracks in the armor that you will look for? Are there things? Is it the compression of profits, compression of profit margins, and that will signal a potential downturn? Or is it a game of, look, I don't know actually where the pain or the risk is going to come from. All I know is if these two numbers keep going up, that means the bull market's not over. I try to keep it simple.

2:29I mean, probably more the latter there. But I will say, let's talk about NVIDIA for a second, right? Three years off the October 22 lows, NVIDIA stock was up 1 ,500%, as most people know. NVIDIA's profits, Anthony, were up 1 ,425%. So, yeah, there's a little multiple expansion there. But you look at the MAG 7, everybody's just hammering because, oh, my goodness, it's a bubble. Listen, six of those companies the last three years have had extremely strong profit margins and very little profits and very little multiple expansion. Tesla's the one. Yes, that's been all multiple expansion. But the other six, not so much.

3:02I just keep pushing back. I know you had Dan Ives. This was a great conversation with Dan. And, of course, Dan's going to say it's not a bubble. And he's been right. I'm not going to disagree with Dan. I think those profits are justifying where we are. Now, when we go and we look at this multiple expansion, you talk a lot about the MAG-7. There's 493 other stocks in the S &P 500. I saw a stat recently that actually if you take out like the 490, 493 stocks, they've actually been negative the last couple of years compared to the MAG-7. How do you look at this relationship between these things and the fact that the S &P 500 is actually doing much better than maybe the rest of the stocks?

3:36Yeah, I'll say I've done this for a long time. It feels like I've been hearing year after year after year. It's only a couple of stocks going up. I call it the Michael Jordan syndrome. Sure. The Bulls don't win six championships without Michael Jordan, but they had him, right? So let's not ignore the fact that they had him. And then you can talk about the idea that just a few stocks going up. I mean, equal weight S &P 500, equal weight NASDAQ 100, equal weight Dow. So again, that's not looking at, like the name suggests, equal weight to all of them, are still up well over double digits this year.

4:03Yes, it's not up as much as the cap-weight indices. I don't think that's a bad thing. Go back and study history, everyone. What tends to lead in bull markets? It's large caps. Those companies get bigger and bigger. I mean, I remember back, well, like I said, I don't remember the exact year. Whenever 2017 or 28, I think it's 2017, Apple hit a trillion dollars as close to that. Everybody freaked out and said, that's it, that's it. Well, how have things gone since then? So we're aware of that, and we can get into this. But if you're worried about AI and you think it's truly some big bubble, there are other parts of the world.

4:31Just this morning, time you and I are doing this, Germany's ripping, all right? Literally, European financials are hitting the highest level they've hit in the history of mankind the time we're doing this. It's really hard for me to think that European financials truly care about our government being shut down, or maybe there's some AI, maybe. But that just says it's a global bull market with a lot of reasons to be risk on. And that's the way we've been for three years. We're still there. All right. Now, while this global bull market is running, the fear and greed index keeps showing us people are fearful.

5:00They're extremely fearful. I mean, it's kind of like, how do you have a bubble top if everyone is fearful and this gauge is showing that everyone is worried? I don't think you do is a short answer. That's that CNN fear and greed. And listen, you can look at the components of that. I think it's kind of flawed, but it is what it is. But just other things we've seen just lately. The New York Times had a cover op-ed talking about this is 1929. This was on November 7th on Friday. There's an op-ed saying we're 1929. Okay, that's the stuff that people are reading. The AAII sentiment poll, see if I can get this right.

5:35American Association Individual Investors. There it is. We've had more than 10 % bears than bulls this year on average. Anthony, only three times in history have we seen that. 1990, 2008, 2022, all down years, all really rough years for investors. So if everybody's thinking alike, somebody isn't thinking. I use that a lot, General Patton, all this negativity we're still seeing. To me, it suggests that, listen, this bull market is not over yet. I have no idea how long it'll go. I talked to you last time. We'll last on this. This bull market made it to its fourth year, right? Just had its birthday, I guess, last month.

6:07When you look at the five previous bull markets that made it this far, the average is eight years. The shortest is five years. So we have no clue how long this bull market will go. I just think it's going to go a lot longer than most people think. And it's being driven by Fed policy, which is more dovish and a strong economy end of the day. Now, when you go and you look at the fact that this is like a hated rally, the fact that people are fearful, the fact that people on sentiment in terms of on X or on Reddit or even in podcast, everyone is like, this can't possibly keep going on. Does that fuel this higher?

6:41And if all of a sudden everyone becomes really excited, that's actually the time to be fearful? Like I said, a weird, you almost need like a balancing act here where the more people are fearful, the higher the stock market will go? We think so. I mean, let's look at just Friday, for instance. Just last week, I had a big down day on Tuesday, little bounce on Wednesday, big down day on Thursday. We came in Friday down 1.3 % of the S &P. Everybody was freaking out. Everybody's worried. S &P broke its 50-day moving average technical thing that you kind of look at. And it just felt like just over the top into the world.

7:10And I'm looking and the S &P is like 3 % from all time high at the time of that. And then what happened? We had a huge reversal. S &P finished higher on Friday. I call it the shake and bake. We broke the 50-day, closed above it without getting too into the weeds of that. I look at those numbers and you tend to have extremely strong performance in the near term. And look how this week has followed through with Monday having maybe talk about Monday if you want. with Monday literally having one of the best days of the year. Now, you keep saying Mondays are going to Monday. And so what the heck is this guy talking about?

7:38I go and I look at the data that you published and 10 straight Mondays were in the green. Mondays are amazing days. Tuesday, Wednesday also seem to be great days this year. Thursday, Friday are actually down days, it seems like. And so what is going on with Monday through Wednesday? Are all of the investors and the Wall Street folks just taking Thursday and Friday off? Or what's happening here? I don't know. No, I didn't get the memo because I know we're working on Thursdays and Fridays, aren't we? But no, the truth, I get a lot of just think this year, just this we're talking about just this year.

8:06We've seen this phenomena. A lot of bad news is coming out Thursdays and Fridays. That's the honest truth. Like, you know, we're not Trump's not going to meet with she. And oh, my goodness, there's the Fed's going to do this. The Fed's going to do that. All this negativity comes out late in the week. And then what happens? Usually by Sunday, maybe Sunday morning talk shows, there's some type of fiscal news or something coming out of Washington. it's positive or just this past Sunday, right? I don't think this is a coincidence, everyone, right before futures opened, it started to leak that, hey, look at this.

8:31The Senate's going to vote to reopen the government. Boom, there's your pop. So it's a very, I hate, you know, it's old saying news trumps charts. And we are in a news driven market. We're still in a bull market. We're very clear. But I think that's kind of the reason we've seen that last comment on this. Usually Monday is not the best day of the week. Usually it's later in the week. But listen, it is what it is. I know I was talking about this every week. I just have Mondays up a lot. I mean, the amount of people that snickered a week ago when I was saying on Monday's up nine of the row was off off the charts and negativity we're talking about.

8:59And then we literally had like the second or third best day of the year on Monday. So go figure. Now, the S &P is traded within three percent of the all time high for five straight months. That feels like a pretty big deal. Is that the longest streak ever? What is that telling us? Yes, it's not the longest streak ever, but I think it's in top two or three at this point. We've had some longer. But what's it tell us? is, I mean, that being too obvious, we're hanging out in their highs. We're in a strong bullish trend. The S &P is up six months in a row. The NASDAQ is up seven months in a row. And that's what I was talking about on Friday, where I was just shocked when you got S &P flirting with new all-time highs and hanging in there.

9:33Yet everybody freaks out. Everyone wants to sell everything, tell you how bad everything, tell you it's 1929 all over again, tell you this, tell you that. But then if you peel back that onion, it's just simply not as bad as everyone says. We had some pretty solid ISM services numbers next week. I get it. The government shut down. We're not getting a lot of data. We know the labor market is weakening. We understand that. But I think once we start getting this data and this government opens up again, Anthony, we're going to see that it's weakening, but not cracking. The labor market is what I'm getting at.

10:00But the door is still open for the Fed to cut, and it is what it is. We've got a dovish Fed. We're going to have a new Fed chairperson next May. He or she, I should say, is going to probably be dovish as well. And we think it's more of a mid-cycle slowdown or mid-cycle cutting period, kind of a la the early 80s or early to mid 80s. And again, if you can cut without a recession, which is our base case, take a while, guess what happens? Stocks usually like that. That's why we're still pretty optimistic next year. Now, what's interesting to me is momentum is this really powerful thing, right? You know, kind of things in motion, stay in motion.

10:32You've got some data is if the S &P 500 is up 10 % year to date going into November, it's usually a very good thing. What have we seen in the past? Well, that's right. You think about it, because what do we know? Like 82 % of fund managers are underperforming their benchmark, people that do what I do. We manage almost$7 billion on our team, my friends and colleagues. Everybody freaked out in April and sold, so they're behind the eight ball. So now you're going to have any weakness they need to buy into the end of the year. And when you're up 10 % going into November, again, like we were this year, November, incredibly, has been higher like 13 in the last 14 times.

11:03November and December, Anthony, have been higher the last 16 times in a row. Those last two months of the year, 10 % or more going into it. And one more level, when you're up 15 % or more, like, again, we were. The last two months have been hired 20 out of 21 times. Listen, it's just one stat, just one figure. Don't get all worked up over one number. But when you stack all these things on top of each other to hear something like that, and then you see European banks breaking out. I mean, South Africa is up a ton. South Korea is up 70 % this year. We love developed international. I look at Germany up a whole bunch for three or four months this year.

11:34It's literally gone sideways for a while, kind of catching its breath. I think Germany developed international is going to start really taking that baton, doing well. It's a global market. Let's enjoy it. Not stop complaining is where I sit. Now, you mentioned some global markets, but one of the things I've seen you talk about is S &P 500 companies with more than 50 % of their revenue outside of the U.S. So these are U.S.-based companies, but they may actually get more than 50 % of their revenue from outside of the United States. What are we seeing there? You did your research. I'm impressed. That's a good one there.

12:02It's a good question. I love this conversation because this is where I was talking about earnings earlier. But then when we peel back that onion a little bit, if a S &P 500 company gets more than half its revenue from overseas, all right, that's where we are right now. The S &P 500 earnings for those companies are actually better. S &P 500 earnings are up like 13.1%. If they get more than half their earnings from overseas, it goes up to 14%. Revenue is up about 8 % right now. If more than half that revenue comes from around the globe, it goes to 10%. Long-winded way of saying if you look at that and you say, gee, I thought they told me on TV the rest of the world was slowing down.

12:36I thought they told me on TV that everything was doing terrible out there. No, these global companies are actually doing better than ones that are a little bit more domestic by nature, which, again, to me is a reason if you have an equity allocation, like we manage, obviously, portfolios at Carson Group. We've had a pretty big part of developed international all year. We don't like EM quite as much, but believe me, we have EM. It's why you want to be diversified, overweight equities, but still with a nice global bucket. And that's one reason to continue doing that, in our opinion. Now, I got on the internet the other day and I saw the bears.

13:06They all had their latest smoke coming out of their little machines. And they were saying the Hindenburg Omen. I never heard of that before. Maybe I should be worried. Maybe I should go and do some research. What is the Hindenburg Omen? And why are the bears using this as their new religion as to why the stock market is going to collapse coming here in the next couple of weeks? Yeah. Yeah, so the Hindenburg Oban plain and simple is when you have multiple stocks, or just overall, the New York Stock Exchange making 52-week highs, and a handful of stocks make a 52-week low. So it's like something's off, something's wrong.

13:37And I'll be clear, we saw some Hindenburg omens before 1973-74 bear market, before the 87 crash, before the tech bubble, before the GFC. Honestly, there were a couple of triggers right before COVID as well. So that's what everyone's talking about. What they don't tell you, Anthony, I looked. There have been like 190 of these signals since 1971. I mean, so you can pick and choose. And again, to me, I'm not ignoring it because like, well, it has nailed some things, but you need to look at the whole picture. You need to look at things. Just last week, all right, seven sectors were higher on the week.

14:10Eight sectors outperformed the S &P 500. And if you really get into the weeds, there were more stocks in the S &P 500 from, I guess it was from Monday to start of last week to Friday, that were above their 20-day moving average, that were above their 50-day moving average. What I'm saying is Hindenburg things tell us there's no participation. Something's fluky out there. No, we are seeing a broad based rally. Yes, technology mag seven had a terrible week last week. I get it. We get it. The bounce back pretty nice so far. But then you look around and other groups are doing really well. So, you know, I'm not saying we're ignoring it.

14:39We're pushing back in a big way. You know, last comment here, I look at advanced decline lines, cumulative basis, how many stocks going up versus down. Those made new highs just literally last month. They've pulled back a little bit. To me, we're going to see clear signals of market deterioration that should give us warning signs. We're just not seeing them. So to me, you hear the word Hindenburg, maybe buy a little more. I love to hear that. Now, Fed policy, obviously, they have been cutting. There's a little bit of question about the December rate cut. But going into an easing cycle, as you mentioned, it's good for stocks.

15:09What's your guys' view on what the Fed will do and whether it's going to matter for stocks? Yeah, well, it's going to matter, we think. I mean, they're probably going to cut in December. We did it a couple weeks ago. Powell kind of poo-pooed the idea of cutting in December because he didn't have the data. He had to say that. But I think most people are aware the labor market's weakening a little bit, so they're wide open to cut. But I think I might have talked to you last time, but I'll point it out again. So when the Fed cuts within 3 % of an all-time high, so right near an all-time high, they just did it recently and they did it back in September, the S &P 500 is higher a year later, 21 out of 21 times, up like 14 % on average.

15:41So we have a Fed that's going to continue to cut. But the big question, and I get it, everyone's saying, well, listen, the economy's pretty good. We think it is. Earnings are strong. Should the Fed be cutting? Are they just going to hyperdrive things and cause massive inflation and cause this big asset bubble? I mean, I guess we'll cross that bridge when we get there. We don't think so. We're not seeing a lot of inflation. I mean, shelters finally, and I get it. We haven't had inflation data for a minute. But we're starting to see inflation data, I'm sorry, shelter data start to crack and come down.

16:05That makes up like, what, 41 % or 42 % of core CPI. So inflation is not a worry to us. Labor market is. The Fed should be cutting. And we think your interest rates down maybe around three, two and a half, three percent a year from now makes sense. And this economy probably can weather that and continue to grow. And and markets are going to like that, in our opinion. Now, President Trump went on True Social on Sunday. He always does it on Sunday, by the way. I'm talking about good news on Sunday or bad news, whatever news on Sunday. It seems to be opportune times, you know, to to fire off some good news.

16:36And he started talking about a two thousand dollar tariff dividend, a stimulus check. He said, I'm going to give the people the money. Last time, that was pretty good for asset owners. Not so good for inflation, long term health of the economy and the bottom 50 percent of Americans. But we're here to talk about the asset owners and the stock market. If this happens, just a replay of what occurred in 2020, 2021. Yeah, we think so. I mean, I'm not so sure because he has to go through Congress for this, you know, and we see how difficult it's been just to start up the government again. And so we'll cross this bridge when we get there.

17:08There's some politics involved. But I think I think it makes sense that if people get some money, they're going to go spend it. And you look at things like retail sale. Well, we haven't had retail sales in a while, but until we did, they were hanging in there. What's fascinating about the consumer, by the way, Michigan, this is what I was going to talk about earlier, Michigan Consumer Confidence or Consumer Confidence Index. That's what it's called. Anthony, on Friday was the second lowest in history. All right. So because the consumer apparently is more worried now than they were to a hundred year pandemic or during the great financial crisis.

17:36But I remember every Friday looking around and somebody I knew was getting fired. I didn't luckily. But, you know, like that felt those times felt worse to me than right now. And maybe some people don't feel that way. But the expectations of consumers are so low. Maybe have some politics. Well, not maybe there's probably some politics involved in this. I mean, it was the same way a couple of years ago for Republicans. I get it. We get it. But the reality is expectations are so low. If you give people money, they're going to spend it. And we're still seeing, you know, the people are out there spending and still growing.

18:04I mean, yes, we get it. The top 20, 30 percent are the drivers to this economy. As a steward of assets, we are aware that the bottom 50 percent are still struggling in a lot, a lot of ways, getting jobs. People graduated from college having trouble getting jobs. We see these things. But our job is on the aggregate to see what's going on out there. And the reality is the front of the plane is still doing OK as of now. And that's probably going to continue to drive this economy and drive the stock market. It's no easy answer there, but that's my job is to see the aggregate and it still looks pretty good.

18:32Now, you know what's interesting about the Michigan survey is Tom Lee went and they published all of the kind of raw data. And he explained to me that there's been a shift in who they actually survey. So it used to be 50-50 Republicans and Democrats. Fantastic job. Exactly how you would expect it to be. Whether it is something that is intentional or not, they've moved some stuff online. Like there's a lot of questions as to how this happened. So put aside for a second kind of what's driving it, but just the outcome is they are now surveying about 65 to 70 percent Democrats and somewhere between 30, 35 percent Republicans.

19:06Now, why does that matter? Well, if you look at something like inflation expectations, I think Democrats are at 5 percent and Republicans are like one and a half percent. Newsflash. The truth is somewhere in between. Right. It's not going to be five. It's not going to be one and a half. And so what you're getting is you're getting the skewing of the sample pools or the survey pools. And so, again, to your point, you know, is it intentional or not? I don't even know if that necessarily matters. All I know is that you're starting to see these data points that kind of don't make sense. Why is the consumer so bearish, according to the survey, and stocks are at all time high?

19:35Spending is still strong. Like, it just doesn't make sense, right? So, no, it doesn't. Two things are Tom actually from Michigan. So it made sense. He dug in there a little bit. What's I going to say? I'm going to say something else. Oh, here it is. Here it is. So they actually have this data. They break it down. I mean, I assume it's accurate from the Michigan Consumer Sentiment Index. I'm going to go close enough to government work or something like this. But Democrats, I know, were like 31 or 32 percent optimistic, whereas Republicans were 91 percent. All right. So, again, it's just an independence or 45 percent kind of near the middle.