The bank is fully aware of the various macro risks facing the markets, including trade concerns, midterm elections, a narrowing yield curve, rising inflation and decelerating earnings per share. But, against these threats, Credit Suisse sees the S&P 500 rising to 3,350 by the end of 2019.
While there are numerous concerns, there are also plenty of positives, including soaring corporate profits on the back of tax benefits, solid consumer spending and sentiment and robust tech results.
The U.S. economy grew at 4.2 percent according to last week’s revised reading. Commenting on American’s economic strength, Kenneth Rogoff, Harvard University professor and former chief economist at the International Monetary Fund, told FOX Business, “It’s something that is stunning people around the world, who keep upgrading their estimates on what the U.S. is doing.”
When it comes to those who think the cycle may appear to be mature as measures in years, Credit Suisse believes that it is much more spry than many investors believe.
Also, Credit Suisse noted that stock prices are cheaper than they were earlier in the year, saying that “While the market has advanced 8.5 percent year-to-date, stock prices have lagged EPS growth, leaving equities at 1.5x multiple points cheaper than at the start of 2018.”
Not everyone is bullish on the future of the market, however. St. Louis Federal Reserve President James Bullard told FOX Business on Tuesday that, “Productivity needs to ramp up or the U.S. economy will end its winning streak.”