RBC´s Gollub sees S&P 500 clocking in with 10% advance in 2016
RBC´s arch-bull Jonathan Gollub saw the US stockmarket powering ahead in 2016 as commodity prices stabilised and the US dollar and interest rates moved higher.
"Whereas 2015 was marked by falling oil prices, a diminishing global growth outlook and flat rates [...] our constructive 2016 outlook is predicated on stabilising commodity prices, and an incrementally higher dollar and rates. All of this should result in a substantialy higher earnings trajectory as well as a modest re-rating of stocks," Gollub said in a research note sent to clients.
The strategist set his year-end 2016 target for the S&P 500 at 2,300 points, 10% above his recently downwardly-revised year-end target for 2015.
Year-to-date the US equity benchmark had advanced just 1.5%.
Indeed, the drag in 2015 from lower oil meant there was a 'lower-bar' to clear, the strategist said.
His forecast was for a 6.7% rise in earnings per share for the S&P 500´s constituent companies in 2015.
Since the start of the recovery, strategists have been systematically overly optimistic in their forecasts for the rate of growth of the US economy, he said.
However, if their calls for gross domestic product to expand by 2.5% next year panned out, that would still mark the fastest pace since 2010, Gollub concluded.