Market Overview

Credit Suisse Sees 2150 For The S&P 500

Credit Suisse Sees 2150 For The S&P 500
Related SPY
The Easy Money Has Already Been Made In HP Enterprise
The Market In 5 Minutes: Tax Overhaul In Focus As Senate Passes Budget Plan

Credit Suisse’s Andrew Garthwaite maintains a Neutral rating on equities, while expecting the S&P 500 to touch 2150 by year-end of 2016 and for the Euro Stoxx 50 to reach 3,350.

There Are Positives

Garthwaite pointed out there have been improvements in several areas, such as the China housing and infrastructure segments, although the lead economic indicators “look like they are rolling over,” and policy indicators show tightening.

On the other hand, the analyst stated that “almost all risk trades have been correlated to oil,” and if oil rose above $50pb, Saudi Arabia would be unable to meet its “apparent” economic and political objectives, “including preventing the US becoming self-sufficient in energy.”

Related Link: Asian Stocks Rally On China's Large Gains, While Europe Trades Lower

Noting that the Fed had become “more dovish” with the market rally, Garthwaite said this was now reversing, and bond yields “have never decoupled to this extent from ISM new orders, cyclicals or commodities.”

In addition, earnings revisions in the United States have turned positive for the first time since June 2014, although this has been driven largely by the dollar and commodities. Therefore, this could be a misleading signal.

Some Things Didn’t Improve

Garthwaite mentioned the Global PMI has not improved, while the global nominal GDP growth is the weakest since 2008–2009.

Also, “US labour is getting some modest pricing power and hence the gap between nominal GDP and wage growth has fallen to its lowest in this cycle,” the Credit Suisse report said.

Posted-In: Andrew Garthwaite Credit SuisseAnalyst Color Technicals Reiteration Markets Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (SPY)

View Comments and Join the Discussion!

Partner Center