FEMO Lifting Economic Growth & Foreigners Lifting US Stocks

In the spectrum of bullish stock markets, there are two polar opposites. The first is driven by FOMO, the Fear of Missing Out, which inflates P/E multiples as investors chase hope and hype rather than fundamentals, creating the conditions for a bubble. The second is driven by FEMO, or Fabulous Earnings Momentum, which works the other way around: Corporate earnings grow faster than stock prices, compressing P/E multiples rather than expanding them, and analysts raise their estimates because the fundamentals justify doing so.

The current bull market has been in the middle of the spectrum, but has moved more toward the FEMO variety this year. It is being driven by real, measurable, and record corporate profits. And it is lifting not just stock prices but the entire economy. Consider the following: