Alger's Neuman" Profit growth has outpaced stock prices, creating a 'positive setup'

Brad Neuman, director of market strategy at Alger,  says the market is wrapping up "one of the strongest earnings seasons in history," which has created "incredible metrics" creating the impression that the market has gotten overvalued while he thinks that stocks haven't been able to keep up with earnings, which actually makes current valuations more attractive even as the market flirts with record highs. Neuman says he is not particularly worried about inflation, because he thinks A.I.-driven productivity gains will offset higher prices, but he notes that with artificial intelligence being "as significant to the human race as fire or electricity" there is the potential for a bubble, but he doesn't see that happening until 2028 at the earliest. David Trainer, president at New Constructs, calls out trouble in stocks he labels as "five-alarm cash fires," companies that are burning so much cash to keep pace in the artificial-intelligence race that — without an influx of capital — they will soon run out of cash and be forced to dilute investors' holdings to get more. He says the problem is that big-name stocks like Oracle and Amazon.com are now priced as if they will be winners in the A.I. arms race, and they are spending as if they have won the competition, when he considers it very unclear as to just who will be the ultimate victors in the A.I. revolution. In "The Week That Is," Vijay Marolia, chief investment officer at Regal Point Capital, discusses the upcoming earnings reports for WalMart and Target, which he expects to be a better measure of ongoing consumer confidence than any survey results, showing that consumers have not curtailed spending despite inflation concerns. He also discusses Goldman Sachs' big move into the ETF space, and how he feels about the national debt for the United States hitting $40 trillion — a mark it is expected to reach by the end of the month — and whether it impacts his view on government bonds.