Bull Case Holds for 2026 – Lori Calvasina
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What is the overall outlook for the S&P 500 and why is the target set at 7,900?
What was the peak to trough drop recently with the Iran war?
9.1%.
So quite small.
But look, it was rational. And so, you know, we sort of look at that 9.1%. And that's about what the market should do if you are not putting recession on the table. And as concerned as the geopolitical community has been about this, I do think the market did what it was supposed to do if we're not having a recession or seriously concerned about one. I would say as we have read through company transcripts, we are really hearing a lot about buffers in terms of inventories, hedges that are in place. And we're also really hearing a lot from companies about their ability to manage through tough times. And I can't tell you in this last reporting season how many companies I saw referring back to COVID, referring back to tariffs, patting their supply chain teams on the back and saying what a great job they're doing and really projecting a lot of confidence about their ability to manage through.
If I just sort of think about a very basic kind of next 12 months S&P 500 PE, that one is sitting on our last update I think around 23.6 times. What we saw back in the fall was it was around 28 times. We are not cheap and we never got cheap, you know, with this 9.1% drawdown we saw around the war. I think the lowest number we recorded was maybe around 22. But it's certainly not back to where it was. So we think there's still a little bit of room to run on that basis.
Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge. The Master Investor Podcast is sponsored by LSEG, Interactive Brokers, the World Gold Council and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice or a personal recommendation. More on that in the show notes. My guest today is Laurie Calvasina, one of the most respected and closely followed U.S. equity strategists, making her name initially in small caps at companies like Credit Suisse and Citi before broadening her expertise to become head of all U.S.
equity strategy at RBC Capital Markets, where she has been since 2017. Laurie, it is a delight to see you. Welcome to the Master Investor Podcast.
Thanks for having me. It's great to see you again.
Really good to see you again and lots to get to. Been a fascinating couple of weeks of bits of data to come out to react to. But my first sort of big picture question to you is an equity strategist. I know RBC and you personally with your small cap background, you love to pour over every little bit of data that comes out, the earnings, the numbers, but also the call transcripts.
How does Lori Calvasina build her S&P 500 price target – what’s the five‑model approach?
When you come up with, we think the S&P 500 is a buy or a sell, is it just the data, the hard data? How do you gauge as well the kind of less tangible factors like sentiment and just what you're feeling in your gut?
It's a great question. And I'll say I've been doing equity strategy for, I think, like 25, 26 years. I've been doing this since 2000. Not always head of the team, a peon for many of those years. But, you know, I've thought a lot about it because I think an S&P 500 price target, it gets a lot of attention. It's a very tricky exercise. The answer is all of the above. But I would say where I feel like I'm a little bit different is I do try to lead with the data and rely on the data much more than, say, some of my other competitors. And I think the reason for that, right, is that strategists like anybody else can get sucked into the emotions of the moment, right? Whether you're at the top looking at euphoria, whether you're at the bottom looking at pessimism.
And so I think those numbers, you know, even if you do have to make some adjustments, and I'm making one adjustment right now, which we can talk about, but I think the numbers really force you to think through the math.
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Chapters
8 chapters
1
What is the overall outlook for the S&P 500 and why is the target set at 7,900?
0:00–2:57
2
How does Lori Calvasina build her S&P 500 price target – what’s the five‑model approach?
2:57–5:32
3
Why does the new 7,900 target represent only single‑digit upside from current levels?
5:32–8:10
4
What does the sentiment model show – is investor sentiment neutral or bullish?
8:10–10:37
5
Which sectors (energy, materials, tech) are driving the strongest growth rates?
10:37–12:13
6
How is the AI “fast lane” performing and why isn’t it affected by the Iran war?
12:13–16:16
7
What are the current valuation multiples and where does the 23.6× PE sit in historical context?
16:16–33:58
8
How might the new Fed chair and upcoming mid‑terms impact the market outlook?
33:58–49:49
Speakers
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