Underlying market trend still deserves 'benefit of the doubt', says Truist's Keith Lerner

John Fortt (Closing Bell Overtime Anchor) 00:00.110

now as i mentioned markets staging a comeback today thanks to cooler inflation data nasdaq 's the big standout pushed higher by AI and mag seven and of course micron is this a sign we're going to see a rotation back into these names or have investors moved on joining me now are

John Fortt (Closing Bell Overtime Anchor) 00:15.390

keith lerner from truest wealth and warren pies from three fourteen research guys welcome warren how good was this inflation report versus what some of the fears were out there disinflation perhaps

Warren Pies (Co-Founder & Strategist) 00:29.990

yeah thanks for having me john i i think the data quality was they were left a little bit to be desired but the ultimate net read is positive for the markets and i think it's you know we've had this blackout of data during the government shutdown and we're finally getting the

Warren Pies (Co-Founder & Strategist) 00:45.710

data dumped some employment data this week and now CPI data and it kind of confirms like something we talked about if you go back twelve months ago when i was on with you is that we looked for three disinflation to come through three broad vectors in this economy oil labour and

Warren Pies (Co-Founder & Strategist) 01:00.270

shelter and i think the shelter data in this CPI report was especially encouraging and it shows that i think that that is that story is definitely evolving and will be with us for the first part of the year so positive yes

John Fortt (Closing Bell Overtime Anchor) 01:12.750

OK zooming out to the market implications keith since september the nasdaq 's kind of been bobbing between twenty two K twenty four K we're sort of in the middle there S and P has been stuck between sixty five hundred sixty nine hundred we're a little bit higher than the middle

John Fortt (Closing Bell Overtime Anchor) 01:29.710

where are we in the cycle why do you think we're we're sort of bobbing around

Keith Lerner (Chief Investment Officer) 01:34.560

well you know i think the big but if you zoom out for a second the big picture is you know we had one of the biggest six month returns for the market we've seen in history and and if we think about the technology sector you were up about seventy percent off the low so i think

Keith Lerner (Chief Investment Officer) 01:48.040

what happened is that you had expectations become elevated and you've been churning rotating to kind of cool that off but i think in some ways you know marcus can correct in time or price we're seeing a little bit of both i think ultimately that's a good thing and as we look

Keith Lerner (Chief Investment Officer) 02:01.800

into next year you know our our base is that we have a modest uptick in the overall economy and when we look historically at bull markets that have turned three there's been seven of them since nineteen fifty all of them saw gains the following year and then lastly more recently

Keith Lerner (Chief Investment Officer) 02:17.070

we saw the fed once again cut rates when the market was around an all time high historically when you look forward twelve months the market 's been up about ninety percent of the time so to put that all together john i think we're going through a little bit of arrest but i think

Keith Lerner (Chief Investment Officer) 02:29.470

ultimately the underlying trend still deserves the benefit of the doubt

John Fortt (Closing Bell Overtime Anchor) 02:33.550

interesting warren you also think that the SP five hundred will rise more than ten percent from where we are here by the end of next year

Warren Pies (Co-Founder & Strategist) 02:42.990

yeah our target is seventy eight fifty i i think that we're going to have the strongest earnings growth next year that we've seen since twenty twenty one i think the most encouraging thing when we we dive into the the what's going on in the markets right now is if you look at Q

Warren Pies (Co-Founder & Strategist) 02:57.310

four estimates so the quarter we're in right now which will be reported really generally around mid january we're seeing those estimates continue to levitate generally this time of the year they're coming their companies are talking them down so we've only seen this a handful of

Warren Pies (Co-Founder & Strategist) 03:12.510

years post in the last twenty five years or so and it's the most we've seen since twenty twenty one so i think it portends a very strong earnings year and contrary to the popular opinion out there i just don't see a lot of multiple compression in this market i think we get

Warren Pies (Co-Founder & Strategist) 03:26.430

modest multiple expansion because margins are expected to be up by ninety basis points next year the fed is cutting i challenge anyone to find me a historical year where multiples come in while margins rise that much and the fed 's cutting just generally doesn't happen