2017 Forecasts – Stifel, Canaccord


Our S&P 500 target is 2,400 in 2017 with no recession seen until late 2018
Our S&P 500 target is 2,400 in 2017 with no recession seen until late 2018. The S&P 500 continues to act as if Fed exit began in May 2014 during the QE3 taper and we expect the Fed to “over-hike” and trigger a slowdown and bear market at a surprisingly low fed funds by 2018-19E. Thus, we see both ~2,400 and ~2,000 for the S&P 500 in the next 3 years. We forecast reflation trades (Value vs. Growth) peaking with S&P 500 y/y EPS momentum 2H 2017E ($125 EPS in 2017E +15% y/y, Street $131), led by Financial, Industrial and capex stocks. History also shows that the risk-on trade (and S&P 500) skews toward November to April performance, so our advice is to “sit tight.” Policy settings remain critical after a near recession/premature tightening in 2H14-2015, but we detect a more careful Fed and fiscal help in 2017, watching long-term inflation expectations, the U.S. dollar and yield curves as we await synchronous global GDP growth.
greg blotnick
greg blotnick


Canaccord / Tony Dwyer – bullish but waiting for pullback to buy

“Staying neutral in anticipation of opportunity. On December 19 we downgraded our market and sector view to neutral in anticipation of a digestive period in the markets. We continue to have a very positive fundamental intermediate-term view, but believe (1) the improved economic data, (2) fear of higher interest rates, (3) a less dovish Fed, (4) historically low volatility, and extreme overbought condition creates an environment ripe for a correction. With the likelihood of a recession so low and our positive fundamental core thesis in place, it isn’t whether we should be aggressive on any meaningful weakness, but when.”