Bull Case Holds for 2026 – Lori Calvasina
5/18/202650 min
Lori Calvasina – Head of US Equity Strategy at RBC Capital Markets – has one of the highest SP500 forecasts on Wall St at 7900. In this episode of The Master Investor Podcast we explore why that is, and do a deep dive into the five key factors she considers when weighing up what her price target for the market should be. This is a rare window into the modelling strategy of one of Wall Street's most respected and closely followed US equity strategists, and a must-listen for anyone looking to understand what data points matter when analysing US equities.
Lori’s Five-Model Approach includes investor sentiment, cross-asset tests (stocks vs. bonds), valuation/earnings, GDP, and the Federal Reserve. At 23.6x PE she thinks the market is “not cheap” but “has room to run”, and is much more attractive that the 28x multiple reached last Summer/Fall. In particular, despite very strong performance in recent weeks she assesses investor sentiment to still be neutral. She discusses the irony that one of the most bullish SP500 targets on the Street only presents single-digit upside from here.
Wilf presses Lori as to whether the recent 9% peak to trough Iran War pullback was underdone. According to Lori, this was a rational move, because neither her nor the market is expecting a recession, justifying the relatively small pullback. She believes the covid pandemic and more recent tariffs have already taught many US companies an important lesson in establishing resilient supply chains, leaving them less vulnerable to more recent geopolitical developments. Lori also outlines why she likes Growth over Value, US over International, and Small Caps, but loves ‘AI Fast Lane’ Growth. Her and Wilf also cover the likely market impact from the Mid-Terms; of the new Fed Chair; and the upcoming slate of mega cap IPOs.
Recorded 14th May 2026
“0:00” Intro
“2:39” How to form an SP500 target
“5:09” New SP500 target of 7900
“7:24” Range of bull and bear case
“8:24” Where is sentiment?
“10:44” Energy, Materials and Tech growth rates stand out
“12:14” AI Fast Lane not impacted by Iran War
“15:29” Sector valuation multiples
“17:42” SP500 23.6x PE, and where that sits in recent range
“22:17” Stressing the target with big Iran War impact
“26:45” Lessons from Covid & Tariffs mean resilience for 2026 at least
“29:36” US/China and tariffs
“32:31” What will US Mid Terms mean for markets
“35:37” Fed outlook under Warsh
“37:19” Like small caps, love large cap growth
“39:52” US over International, despite valuation gap
“42:10” Growth over Value
“43:32” Pressure from summer IPOs?
“44:45” Conclusion – Not cheap, but room to run
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Clips
Transcript preview
First 90 secondsWilfred Frost· Host0:00
What was the peak to trough drop recently with the Iran war?
Lori Calvasina· Guest0:03
9.1%.
Wilfred Frost· Host0:04
So quite small.
Lori Calvasina· Guest0:05
But look, it, it was rational. And so, you know, we, 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, um, 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, this 9.1% drawdown we saw around the war. I think the lowest number we recorded was maybe around 22. Um, 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.
Wilfred Frost· Host1:24
[upbeat music] Welcome to The Master Investor Podcast with me, Wilfred