Executive Summary:
The economy and corporate profits have been remarkably resilient in recent years despite numerous formidable challenges. This year continued the remarkable performance, as Trump’s Tariff Turmoil failed to derail earnings or the economy. As a result, the stock market has soared. We remain optimistic on the outlooks for the economy, earnings, and the stock market, supported by a continuation of this year’s remarkable earnings strength into 2026. … However, there are some legitimate concerns regarding AI-related companies’ accounting practices that call into question the quality of S&P 500 earnings generally, given the Tech sector’s outsized earnings share. … Check out the accompanying chart collection.
Earnings I: Better Than Expected
It is often said that the stock market is not the economy. That’s only partly true; they’re distinct from one another but inextricably intertwined. Stock prices are determined by earnings per share (E) and the valuation of those earnings (P/E). The economy indeed drives corporate
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