Chris Harvey, the agency’s head of fairness technique, sees a unstable path to his S&P 500 to 4,625 year-end goal.
“It’s actually onerous to get excited. If we’ve higher [economic] development, then the Fed doesn’t do something,” he advised CNBC’s “Quick Cash” on Monday. “If we’ve worse development, then numbers are going to come back down after which the Fed will ultimately minimize. The second half shall be higher, however the first half goes to be actually, actually sloppy.”
Harvey’s goal is simply 75 factors above Monday’s S&P 500’s shut.
“Can we go increased from right here? Positive, we are able to go a bit of bit increased. However I simply don’t suppose you may go a ton increased,” he stated. “Individuals have talked about 5,000. I don’t see the way you get to that stage.”
In his official 2024 outlook observe, Harvey advised purchasers to brace for a “dealer’s market” as a substitute of a “buy-and-hold state of affairs.” His early yr technique: Begin with a risk-averse stance.
“The VIX [CBOE Volatility Index] is up 13. Each time we’ve gone into a brand new yr with the VIX at 13, we’ve seen spikes. We’ve seen the fairness market pull again, and it’s simply not an important setup into 2024,” Harvey added.
He warns the upper price of capital is a further market downside as a result of it prevents multiples from going increased.
“So long as the price of capital stays increased, it’s actually onerous for me to get to a a lot increased worth goal,” Harvey stated.
But, he nonetheless sees alternatives for buyers.
“What we need to do is we need to go to the locations which might be oversold. We simply upgraded utilities at the moment. We upgraded well being care,” Harvey famous. “These are areas which have good valuations, respectable fundamentals and most of the people actually aren’t there at this level.”
‘I hate to say that as being head of fairness technique’
“In case you have a look at the options, there are issues which might be fairly engaging. And, I hate to say that as being head of fairness technique, however you may park cash on the entrance of the curve and make a reasonably good price of return and never placed on a complete lot of threat,” stated Harvey.
His 2023 S&P goal is 4,420 — which suggests a 3 p.c drop from Monday’s shut.
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