Expect double-digit EPS growth in 2026, says Hightower's Stephanie Link

Scott Wapner (Host) 00:00.070

all right tom so twenty twenty three we turned in twenty four percent twenty twenty four we turned in twenty three percent pretty good this year too seventeen percent next year we fill in the blank with what sounds reasonable to you

Tom Lee (Managing Partner & Head of Research) 00:15.310

i think it's still possible to have a double digit ear there have been twelve times in the last hundred years where markets posted three years a twenty percent gains this year hasn't finished yet globally half the time markets do even better in the following year so i think next

Tom Lee (Managing Partner & Head of Research) 00:32.310

year is a year where the debates going to be is the bull cycle over or is it going to extend i think it's going to create quite a lot of volatility in the first half but i think GDP growth stronger we have a dovish fed valuations are reasonable so i think we end up exiting very

Tom Lee (Managing Partner & Head of Research) 00:48.590

strong

Scott Wapner (Host) 00:49.030

why a lot of volatility in the first half then

Tom Lee (Managing Partner & Head of Research) 00:52.870

part of it is the trump tariffs could get overturned there is a possibility of an extended government shutdown the nomination and then confirmation of a new fed chair is going to take three months that's could be very controversial i think all of that happens in the first half

Tom Lee (Managing Partner & Head of Research) 01:11.430

of next year

Scott Wapner (Host) 01:12.870

how's that sound to you steph i

Stephanie Link (Chief Investment Strategist) 01:14.550

mean i sound i think that sounds really great the economy is on solid footing we've been talking about that all year long last week we've got some really encouraging data with regards to weekly jobless claims inflation came in a little bit better we've talked about the H eight

Stephanie Link (Chief Investment Strategist) 01:27.630

federal reserve loan growth lending that's actually at a nine week high all time high from loan growth that's very bullish for activity overall the industrial metals are at all time highs and that you have a global central bankers including the fed getting more and more closer

Stephanie Link (Chief Investment Strategist) 01:43.110

to the neutral rate that's a good thing and fed cuts take a while there's a lag impact and i think that's going to bode well for next year and then you have the one big beautiful bill hundred and fifty to one hundred seventy five billion dollars going into the consumer 's hands

Stephanie Link (Chief Investment Strategist) 01:56.150

going into corporate america so capex continues you add it all up and i think you have double digit earnings growth there are some numbers out there that are a little high like sixteen seventeen percent and earnings growth i'm not there but i do think you're gonna see low teens

Stephanie Link (Chief Investment Strategist) 02:07.670

mister

Scott Wapner (Host) 02:07.910

harvey

Chris Harvey (Head of Equity & Portfolio Strategy) 02:09.190

i think high single digits is reasonable

Scott Wapner (Host) 02:11.550

single single

Chris Harvey (Head of Equity & Portfolio Strategy) 02:12.790

single i can't get to ten percent twelve percent fifteen just yet right one of the things that tom said i agree with wholeheartedly the first half you're going to see a lot more volatility than you have seen in a while i think people are sleeping on the macro risk be it USMC a

Chris Harvey (Head of Equity & Portfolio Strategy) 02:28.430

be it the transition with the fed if you listen to powell now he wasn't cocky about this he was he was very humble but basically what he said is i'll see it i'll see you i'll see you at the book we have growth higher we have inflation lower we're back to neutral we don't need to

Chris Harvey (Head of Equity & Portfolio Strategy) 02:43.150

do anything from here and six months if you don't cut rates for another six months that's an eternity in the financial markets and then the last thing is i think corporations are going to after a good year this year they're going to manage down expectations as you manage that

Chris Harvey (Head of Equity & Portfolio Strategy) 02:58.110

expectation that puts a little volatility to the marketplace and lastly risk is priced very very expensively either in the equity markets or the credit markets it doesn't take much to upset the apple card you

Scott Wapner (Host) 03:11.750

want to respond to that because it seems like if not a step by step counter in some respects to your view it certainly is enough of one i mean there's going to be more volatility than we're underestimating maybe too complacent about macro risks that are out there among other

Scott Wapner (Host) 03:26.550

things what do

Stephanie Link (Chief Investment Strategist) 03:27.030

you say i mean i feel good about the macro environment all the things i just said and i think it is a consumer that has been resilient we've been talking about the consumer forever how they have hung in there yes it's the high end not the low end that tends to be the case on on

Stephanie Link (Chief Investment Strategist) 03:41.310

a regular basis unfortunately i don't think the AI infrastructure capex cycle is going to change in twenty twenty six and that's fueling about three quarters of the GDP growth and i do think that that we always have a wall of worry and i've said it you've heard me say it scott i

Stephanie Link (Chief Investment Strategist) 03:58.110

worry when i don't worry because that means that we're complacent i think there's a lot to that that people have on their minds i think we're going to be able to get through it because fundamentals at the end of the day they run the show and if you do have an economy that grows

Stephanie Link (Chief Investment Strategist) 04:10.750

two and a half three percent we're growing north of that now but if you have an economy that's growing two and a half three percent typically that's been a ten percent earnings growth and i think we're going to be a little bit more and you have lower interest rates by the way

Stephanie Link (Chief Investment Strategist) 04:22.230

you have lower gasoline prices you have

Scott Wapner (Host) 04:24.670

more egg price but address address the valuation issue that stocks are you want

Stephanie Link (Chief Investment Strategist) 04:29.230

to go there it's all about earnings though it's if i think double digit earnings are growing in double digits then i do think the valuations are very especially in other sectors beyond