Displaying items by tag: bull market

(New York)

According to both Morgan Stanley and Goldman Sachs, last week’s retail-driven chaos was nothing…Read the full story here on our partner Magnifi’s site.

(New York)

The market has been a bit choppy to start the year, including a loss over the last five days. See the full story here on our partner Magnifi's site.

(New York)

With the calendar flipping to 2021, the big question on everyone’s mind is what 2021 will hold. 2020 was an exceptionally wild, and ultimately very profitable, year for investors. And within the final few months of 2020 was a developing buy signal that rarely occurs. That signal was the constant revision of earnings estimates in an upward direction. Remember that analysts’ earnings estimates are very frequently revised just before earnings are released, and the large majority of the time those revisions are towards the downside. However, in nearly every week of Q4, revisions moved estimates higher. According to Jefferies, “We’d argue that this is one of the most important tailwinds for equities, as earnings revisions are rarely positive”.

FINSUM: Revising earnings upwards breaks almost all rules of the equity research game, so when it happens it is quite notable. This suggests some strongly positive momentum for the economy.

(New York)

The annual next-year forecast cycle for Wall Street’s investment banks is in and some of the findings are interesting. As usual, banks are fairly bullish. However, that was certainly not automatic this year given the huge tumult in markets in 2020. One particular forecast stood out—Goldman Sachs. The bank’s research team, led by David Kostin, has its official 2021 S&P 500 price target as 4,200, or just about 14% ahead of today. Interestingly, the bank also thinks gold is going to rise strongly, from the mid 1,800s today to 2,300. According to Kostin, “On absolute metrics like price/earnings...the market is very expensive relative to its history, in the 90th percentile or greater … But relative to interest rates, the stock market is somewhat attractively valued. Those are two different stories—absolute valuation versus relative valuation”.

FINSUM: As tough as it is to swallow on a historical basis, we think the interest-rates measured basis for current valuations makes a great deal of sense.

(New York)

A top Wall Street research team at BTIG has just said that 2021 is going to be a strong year for markets. They view the current volatility in equities as a good buying opportunity. In either a Trump or Biden win, the economy is probably going to receive additional COVID stimulus, as well as further spending, such as an infrastructure bill. Investors are so focused on the risks associated with the election that they have lost sight of the fact that either outcome will likely be positive for the economy and markets.

FINSUM: We tend to agree with this view, even though it is simplistic. In either outcome, both sides of the aisle will probably be served by being more collaborative than at present, so more economic stimulus is coming.