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Mizhuo Securities chief strategist Carmine Grigoli explains why he is optimistic about the future of the markets.
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So let's continue on with this the markets here reversing yesterday's pullback in continuing to rally for the start of this year but will this continue.
Carmen -- Mizuho securities' chief investment strategist says he's enthusiastic about the stock market welcome T Carmine.
Yes I'm pretty optimistic going forward I do think you'll -- about 1675.
And the S&P by year end target.
Number of factors here -- -- and contribute him -- re acceleration of profit growth in the second half of the year.
The housing recovery is gonna continue.
So I think overall I think you've got -- stabilization in Europe.
And individual investors returning to the equity market -- -- it's a very positive there.
Sounds fantastic but what about our national debt you just heard that CBO -- -- -- six trillion dollars national debt in coming years.
With economic growth at best three point 6% -- market's behavior not environment.
I think I think overall the equity markets are looking at substantially lower growth going forward and probably higher deficits.
These negotiations in Washington need to -- it to.
The work out to be reasonably positive for that financial markets for I think investors are -- overlooking this at this juncture.
These projections are really subject to massive change depending on the negotiations.
So I think overall equity investors -- basically.
Hunkered down for a period of prolonged period of very slow growth perhaps in the -- -- 282.
And a half percent.
Longer term.
-- more more near term how do you know.
Expect markets to react tears we go to this budget negotiation to avoid the sequester the and Anthony mark.
It's or anticipatory.
By nature and and basically the report that we -- and early December.
With ignored these negotiations in Washington I continue to think that that's the right way to proceed.
I don't think you're gonna see a devastating news come out of these that this process and hopefully we'll see something more positive.
And get on a more sustainable path on the deficit front.
But in all likelihood again not likely to see big changes in the equity market will probably only react any significant way.
If we see a recession.
Hello good and Whitney and that -- around the -- here bouncing around this key milestone mark 141000.
I do believe that basically used pullbacks -- buying opportunity.
Yesterday was a bit of a reality check for investors.
You tried to that you have eleven weeks would only one day with a decline of 1%.
The -- had basically come down below fifteen.
That's highly unusual and environment in the high uncertainty that we're seeing.
Especially with with Europe.
I think overall you'd be looking for pullbacks that add to positions.
And and you know I'm not as interesting.
They don't -- at Staples stock like Kellogg's.
Have quite a run.
And it just tells me that investors are still cautious they're still not looking for a lot of risk perhaps.
And that the winners you know the defense of classic defensive sectors are still the way to go with all of the ammunition if you will behind the stock market.
What's fueling I think -- defensive sectors this obviously the the risk aversion that that is at historic proportions.
But also this this desire for yield.
You'll see -- natural progression in end end end end and the chase for yield.
You've seen it in the bond market is sketched out progressed only down to junk bonds and I think now equities are beginning -- to take often reflect.
This this hunger for yield and then the if you look at the spread between the dividend yield on the SMP and the ten year note it -- the most favorable level factories and of the fifty years.
So there's a lot of risk aversion in -- and equities and I think clearly.
The -- to be made here is that that risk aversion dissipates especially given where we are at this point economic cycle.
OK a bullish outlook from -- group Ali thank -- --
