U.S. markets are back near record valuation levels, with the S&P 500 trading around five times book value — a peak not seen since 2000. Despite concerns about U.S. debt and a weakening fiscal outlook, investor optimism remains strong as markets shrug off the record-long government shutdown.
BNN Bloomberg spoke with Ross Healy, chairman of Strategic Analysis Corporation, about rising valuations, earnings-season theatrics and why he still sees room for markets to climb.
Key Takeaways
- The S&P 500 and Nasdaq 100 are trading near record highs at about five times book value, last seen in 2000.
- Healy says investors are ignoring valuations and chasing trends in earnings and sales.
- He criticizes “earnings theatrics,” where companies routinely beat forecasts through managed expectations.
- Despite U.S. fiscal risks, he sees potential for another 15 to 20 per cent market gain if valuations break higher.
- Strength in gold and industrial stocks suggests optimism can persist even with a weak U.S. balance sheet.
Read the full transcript below:
ANDREW: Investors hope the record-long U.S. government shutdown will finally end. The U.S. House of Representatives has to pass a spending package extending government funding until Jan. 30. That optimism over a potential resolution is helping to lift markets this morning. Let’s get more from Ross Healy, chairman at Strategic Analysis Corporation. Ross, great to see you. Thanks very much. Give us your thoughts first on the U.S. government shutdown. Do you think it’s a big issue for investors right now?
ROSS: Not particularly, because it’s heading toward an ending. I think the biggest thing we might anticipate, as far as the shutdown is concerned, is what kind of retribution, if any, Donald Trump decides to unleash on some of the participants.
ANDREW: You mean, in particular, the air traffic control people who didn’t report for work?
ROSS: Yes, exactly — those kinds of things. I don’t think the shutdown really affected much. It put off some issues, but outside of that, not much. The big thing coming up is the implementation of that “big, beautiful” tax bill and the impact it’s going to have on the U.S. balance sheet. That’s what I’m really interested in.
ANDREW: In the sense that it will make the budget deficit soar and cast shadows over the U.S. debt load?
ROSS: Yes, exactly. If you look at the impact on budget deficits in 2026 and 2027, it’s absolutely enormous. Given that the U.S. balance sheet is already quite weak, the impact could be quite strong. It’s no surprise to me, Andy, that the price of gold is at the level it is — and that it’s now oozing higher after that 10 per cent setback it had.
ANDREW: You have a somewhat cynical take on earnings season, Ross — I can’t believe it, but let’s call it mildly jaundiced. You say that companies beating earnings expectations involves a major element of theatre.
ROSS: Oh, listen — if you had an investor relations person working for you, and when your earnings were reported you didn’t beat expectations, I’d fire that person. Their job is to make you look good and to steer analysts to a level of forecast you’ll be able to beat. Unfortunately, it’s not only something that’s been going on recently — it’s been going on for years and years. It used to be 50 or 60 or 70 per cent of companies beating expectations, but now the numbers are 80 per cent plus.
ANDREW: We hear a lot of talk about the forward multiple on the U.S. market, around 23 times — maybe higher last time I looked. But you say investors should also be paying attention to the price-to-book ratio.
ROSS: Yes, they should, Andy. I’ve got quite extensive data going back a long way on market valuation. In 2000, the Standard & Poor’s 500 reached about five times book value. It spent an entire year there, banging up against that level before going into the tank. This year, we got back to that level early on in 2025, and the market said, “Oh my goodness, look at that — it’s back up to its old high.” Then it came down — remember, we had a 20 to 22 per cent decline — and it’s been oozing back up again.
We’re back up to that level again. In our valuation mathematics, that’s a very important level. Breaking out there, which it’s now trying to do, carries good implications for a further gain in the market, probably in the order of 15 to 20 per cent. So I’m very loath to be running for the hills and selling everything, because I think the market is trying to break out.
Those good earnings and sales numbers, which are beating expectations, feed into that air of positivity. I pay a lot of attention to it. Some people pay a lot of attention to valuations, but I suspect that the average investor just looks at the numbers and says, “Gosh, those are good,” and pushes the market further. They could push it another 15 to 20 per cent from here.
ANDREW: Sorry, just to clarify — what’s the relationship to the price-to-book there, Ross?
ROSS: On an adjusted basis, it’s about five times book. We adjust the book so it’s precisely four and a half times for the S&P 500. That was the peak in 2000, it was the peak at the beginning of this year, and that ceiling now looks to be breaking higher. It’s fascinating to watch, because it could be very bullish for the market.
ANDREW: I see. So even though it’s high, you think the fact that the market’s willing to push through that ceiling is, at least in the near term, an optimistic indicator?
ROSS: Yes, I think it could be. When a country has a very poor balance sheet, the way the U.S. does, you have to look at what balances that out. Historically, those balancing factors have been gold and silver — and they’ve been doing well. Another element, in other countries where this has happened, has been the stock market, particularly quality industrial companies. We’re seeing strength there, too. We’re enjoying strength in gold, and I think we may be enjoying strength in industrial companies as well.
ANDREW: Ross, thank you very much for joining us. Ross Healy, chairman at Strategic Analysis Corporation.
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This BNN Bloomberg summary and transcript of the Nov. 12, 2025 interview with Ross Healy are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
