Dave Gruber: Let's talk about the economy a little bit. I know that what you do is bottom up, but you do pay attention to what's going on in the economy. What are you seeing out there right now?
Charlie Dreifus: What I'm seeing is good. I'm seeing slow growth but consistent growth. It's as has been described by others as new neutral, which is sort of a Goldilocks environment—not too hot, not too cold.
The economy grows but not fast enough to cause inflation to rise dramatically or interest rates to rise dramatically. That is fortunately a great outcome that we've sort of evolved into—part by luck, part by the energy renaissance, the manufacturing renaissance, all of these things. This bodes well.
As long as inflation is contained, multiples can stay where they are, and, in fact, what I'm also seeing in the economy is I'm seeing the possibility of companies reporting vastly increased earnings due to their mean and lean process over recent years. They've reduced costs so that the incremental margins on increased revenues will cause earnings probably to come in higher than people expect. And in that environment, while certainly valuations are not inexpensive, they still have room to go higher.
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