As the third quarter earnings season gets underway, concerns have emerged about market valuation levels. Piper Sandler chief investment strategist Michael Kantrowitz joins Catalysts to discuss why he believes these valuation worries may be overstated.

Kantrowitz emphasizes that he is not primarily concerned about high valuations but with the potential catalysts that could lead to lower valuations. He identifies three key factors that could drive valuations down: a rise in interest rates, an uptick in inflation, or a sharp increase in the unemployment rate.

However, Kantrowitz notes that there is "very little concern" about these three factors becoming problematic as earnings season progresses. He attributes the market's gains this year to broad-based multiple expansion and positive earnings estimates for the third quarter.

"The broad consensus for the market today and in the economy is clearly a soft landing, a lot of rate cuts, and pretty good earnings growth next year," Kantrowitz explains, adding that investors shouldn't be concerned unless the economy deteriorates "pretty sharply" or the 10-year yield nears 4.5%.

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This post was written by Angel Smith