" “Compressed Growth Expectations”
In David’s view, the tariff and tax uncertainty will give way to something else. He suspects it will be valuations and GDP growth. As the delightful Gilda Radner as SNL’s Roseanne Rosannadanna used to tell us, “It just goes to show you. If it’s not one thing, it’s another.” Sigh. Here’s David:

“The fact is that an S&P at 22 or 23 times forward earnings has the concentration it does in such a limited number of companies which have an aggregate PE themselves that is probably two standard deviations above historical average; that's an ongoing uncertainty with a strong fundamental backdrop behind it, but nevertheless, it is simply an uncertainty in valuation.

“You mix that in with the uncertainty of what damage has already been done with the tariff war. If there was a huge trade deal announced with China tomorrow, it doesn't really change the fact that there was a certain amount of activity that didn't happen in April, in early May. I could go on and on as plenty of other conference speakers already have about various vulnerabilities that exist.

“And all of this by the way is in the context of just 2025. I believe we're living in a period of compressed growth expectations brought about by a simply entirely new paradigm of government spending and government indebtedness, that when we talk about two to two and a half percent real GDP growth, we are a) talking about best case scenarios and b) we are talking about something that is structurally worse than we have had since World War II.”

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