Despite the ugly market environment, Evercore ISI does not fear a recession
Return of private investors expected
Significant jump in the price of the S&P 500 forecast by the end of the year
The war in Ukraine, the strict corona policy in China, tense supply chains, high inflation rates and the resulting slowdown in economic growth – the environment for stocks looked better before. But despite the ugly market environment, analyst Julian Emanuel from investment banking consultancy Evercore ISI doesn’t believe the US economy will slide into recession. “We see that growth is slowing down, but no recession,” Emanuel said in an interview with “CNBC” – and the question of whether the current stock market in the USA is a stock market with or without a recession is for the Stock market of central importance. “Expecting GDP growth of 1.4 percent in 2022 is very different from expecting a recession. In terms of the market, this is a really significant difference,” said the expert, whose forecast for the S&P 500 then follows accordingly quite optimistic.
Analyst confirms bullish price target for the S&P 500
At the end of 2022, Julian Emanuel sees the broad US index S&P 500 at 4,800 points. Based on the current closing price of 4,132.15 points, this is an upside potential of around 16 percent (as of the closing price on May 31, 2022). The analyst from Evercore ISI had already estimated the same price target in April. At the time, Emanuel emphasized that he was not expecting a recession and that the stock market would soon pick up again, as inflation was about to peak.
Also in the current “CNBC” interview, Emanuel said that private investors would return to the stock market as soon as they realized that the job market remained strong and inflation had peaked. In fact, according to the latest data, annual inflation in the US has already weakened again slightly. “If things slow down, that will be a more benign environment for stock markets,” said the optimistic Evercore ISI analyst.
The credit markets, which are usually the harbingers of a recession, are currently healthy and would therefore paint a positive picture. The situation is similar with corporate profits. “The way to higher ones [Aktien-]Really depends on whether you can ignore the macro news and focus on the fact that you’re still going to see mid to high single digit earnings growth,” the analyst told CNBC.
The expert recommends overweighting in these sectors
Still, Emanuel sees a shift from growth stocks to value stocks still underway. In an interview with the news channel, he said that the urge to sell stocks had recently prevailed, especially among private investors who were disproportionately invested in growth stocks – especially Big Tech. This is also what caused a large part of the price losses on the US stock exchanges. The bull case is now essentially based on the fact that these sales will slowly fade.
The expert sees solid upside potential for long-term investors in the healthcare sector in particular. But according to “CNBC”, he is also bullish for stocks from the financial sector and industrial stocks.
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