We asked traders about the future of equities
Bill Baruch @iiTraderBill
I do not believe we will see a correction of 10% for U.S equities in the next 12 months. Though growth may have been slow in the first quarter, we at iiTRADER have held firm that growth will begin to turn a corner in the second quarter while the second half of the year will be very strong. Most recently a strong May Retail Sales number stands out after missing each month prior since the start of the year. Furthermore, April’s Housing Starts surged to an eight year high and ISM Manufacturing edged out of a sideways rut to beat expectations for May.
The factors for stronger growth are there all the while many multinational companies have come to terms with a stronger dollar. Still, the Dollar Index is about 5% from its recent highs June 16th, the day before the conclusion of the June FOMC Meeting, giving some of these companies an opportunity to hedge. The reality is there is tremendous value in the majority of the companies that make up the S&P 500 3-5% lower from here.
Interest rates are going higher but September’s hike is clearly priced in and the wild card is how quick is the next; we do not believe that we will see 2% in the next 12 months, 2% is a point that we believe fear can step in. Lastly, the third and fourth years of a presidential term tend to be strong and it isn’t until the first year of a new presidency that tends to be the weakest. Not to be political but this aligns with a time where could see interest rates above 2%.
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