Bloomberg Audio Studios, podcasts, radio news, single best idea and we could have had many voices today. Very strong, strong Monday for the end of August. The team just did a great job getting smart conversations. Henrietta Trees was just on fire in studio with Veda partners on the political moment of the nation. But without question, the conversation of the day it was with a great optimist, Edward Yard Denny of your Denny Research. There's two ways to look
at this. The first is that I was at Jackson Hall and I spent more time there than ever ever, ever talking about nominal GDP, the combination of real GDP and inflation. So if you have buoyant nominal GDP, is it because you're getting real economic growth over inflation, or you have the same nominal GDP from Okay economic growth but more buoyant, larger inflation. Here's Edgyar Denny on how it doesn't.
Matter revenues or revenues. The PE times is done in nominal terms, and the E is in nominal terms, so that's correct. We look at revenues and then we look at earnings, and the implication is profit margins and what we see in the data is that the first and second quarter earnings were remarkably strong, much stronger than expected. They usually is a positive earning surprise, but there was
particularly strong in both quarters. And now during the second quarter, we have earnings on the S and P five hundred at an all time record high, and no wonder the stock market is an all time record high. Of course, it helps that the valuation multiple is elevated at twenty two, but I'm thinking the bill market cantinues here on earnings, and I think that earnings will continue to push stock prices higher.
Late in our conversation, ed Yard Denny extrapolating out but in a very sound, not mathematical, but almost fundamental basis. This is the first time I've ever modeled this. While ed was talking, and I think Paul Sweeney saved me and had a brilliant question. I was on the Bloomberg doing the interpolation of if you have a certain number for the standard and pores five hundred, it's mathematically better index.
But if you bring that over to what we're wedded to, which is the Dow Jones Industrial average, what number do you get. Let's listen to Edgar denny on the standard and pores five hundred end of decade.
If you just kind of take normal assumptions of what the economy can deliver and has delivered in the past, you get to ten thousand on the S and P five hundred by the end of the decade. That's the end of twenty twenty nine. And the assumption there is that earnings expectations get up to four hundred dollars a share. And again, that's all pretty straightforward, consistent with the kind of growth, right of six seven eight percent that we've
seen in earnings over the years. And if we get better than that, the market I could very well close even higher than that.
I can't convey how lonely that discussion is. That's the first time I've heard SPX ten thousand, by let's call it twelve thirty one, twenty nine. I've never thought about twenty twenty nine. I'll be like sixty seven years old then. But what it comes down to is what does that mean for the Dow? And the answer is SPX ten thousand is in the vicinity of Dow seventy. I've never framed that. I got to go back and do more work on this we'll be here all week. Exciting week
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