The global growth recovery and the end of trade disputes will combine with another year of buybacks, to continue to drive stocks higher in the next 12 months with the S&P 500 moving to 3,000 – JP Morgan equity strategist says. In addition this strategist expects the first-quarter earnings season to end up with profit growth 2 to 3% for the S&P 500. Note that many analysts were forecasting a decline in earnings. This analyst also expects stock buybacks to boom to $850 billion.
The strategists said they remain overweight cyclical sectors, including technology, consumer discretionary, and energy. They see energy having the best risk-reward with stock prices decoupled from oil prices. There are also existing buyback authorizations that have not been realized yet – to the tune of about $700 billion, as of the fourth quarter.
And companies have about $1.5 trillion in excess cash. With revenues growing at an above-average 5%, which the analyst said is a strong sign of healthy demand. The earnings surprise this quarter is expected to be 4% to 5% – many did not see this coming and of course it is giving stocks a boost as 140 companies report this week with 78% beating expectations.
JP Morgan`s Parker laid out this map, we sourced it from CNBC.