Wall Street Analysts Say Market Rally Foretells a V-shaped Recovery

Epoch Times ^ | 07/07/2020 | Emel Akan

[SeekAndFind]

There’s a common fear that Wall Street, buoyed by bullish sentiment, has gotten far ahead of the economic recovery and corporate earnings. However, despite continued volatility and uncertainty, analysts don’t expect a sharp market correction and say there’s still room for some upside for U.S. stocks ahead.

Much better than expected economic data combined with positive news on drug treatments and potential vaccines for COVID-19 have bolstered investor confidence in recent months. But a spike in coronavirus cases as reopenings advance and the potential for a Democratic win in November pose downside risks to the stock market, according to analysts.

Following steep losses in March, Dow Jones and the S&P 500 soared nearly 40 percent from their lows on March 23. The Nasdaq Composite also rose 52 percent, climbing above 10,000 for the first time in its history.

Morgan Stanley analysts don’t believe the stocks are expensive or way ahead of the fundamentals.

“Our contention has been that the V-shaped recovery in markets is simply foreshadowing the V-shaped recovery we expect in the economy, and more importantly, in earnings,” Michael Wilson, chief U.S. equity strategist at Morgan Stanley, wrote in a report dated June 29.

The forward 12-month price-earnings ratio, a common gauge used for judging equity market valuations, was trading at the high end of a preferred 19–21 valuation range, according to Wilson.

However, he noted that “markets trade at peak multiples when earnings forecasts are at the trough of the cycle, like now.”

He believes earning forecasts of S&P 500 companies have bottomed already and are “likely to exhibit a very steep increase over the next six months as is typical coming out of a recession.”

When earnings rebound, these valuations will no longer look expensive, according to Morgan Stanley, which forecasts further upside for the S&P 500.

[SeekAndFind]

WHAT COULD HALT THE ECONOMIC RECOVERY?

From the above article:

Most Wall Street analysts believe the stock market’s rally could be threatened if presumptive Democratic nominee Joe Biden wins the presidential election in November.

According to Morgan Stanley, the recovery in the stock market is being challenged by “the potential for a Democratic sweep in November, which may lead to a rollback in the 2017 corporate tax cuts and potentially other policies deemed to be unfavorable for stocks.”

Goldman Sachs said Democrats would be negative for corporate profits. In a June report, the Wall Street firm predicted that a rollback of tax cuts could lower its S&P 500 earnings estimate for 2021 by 12 percent. Biden earlier said he would reverse parts of the 2017 tax reform if he gets elected.

CNBC reported in June that the options market began to indicate a negative outcome for the S&P 500 as some investors were betting on a market sell-off following the election with the fear of Democrats winning the presidency and both houses of Congress.

[Buckeye McFrog]

Frankly the average person cares little about this right now and Trump is making a mistake to pin his hopes on it.

If he wants to win he needs a COVID exit strategy and a return to normalcy. That means firing Fauci and putting the squeeze on recalcitrant governors.

[Zhang Fei]

The Chinese stock market is surging to 2-year highs. I suspect bears on the global markets are about to have their heads handed them.

[SamAdams76]

My 401(k) is now higher than it was in early March, just at this Chinese Virus pandemic was breaking out.

Glad I never listed to the doom and gloomers who were predicting a total collapse of the world economy and telling us to bail out of the stock market and put the money under our mattresses.

Now so long as Trump is re-elected in November, we will be home free for a while.

[Repeal The 17th]

“...a V-shaped Recovery...”
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I think it will be more like a U or a W, maybe even a Y.

[MinorityRepublican]

So what’s his play on recalcitrant governors?

[NormsRevenge]

the potential for a Democratic win in November ??

We all know how generous they are with OPM.

Especially their Wall St. ones.

[Flick Lives]

That means firing Fauci and putting the squeeze on recalcitrant governors.

—

That would seem to be the direct attack, but it would make a media martyr out of Fauci and provide the Dems with ammo for impeachment 2.0.

Months back, Pres. Trump offered to direct the recovery. The Dem governors reflexively rejected his offer. Trump said fine, it’s all yours. Now they own the steaming mess they’ve created.

Pres. Trump seems to follow a very simple strategy with Dems. It’s the idea that the only thing worse than not getting what you want, is getting what you want.

[chuckee]

Ummmm,what’s to analyze? The nasdaq already has had a V shaped recovery reaching new highs. The S and P index is on cusp of reaching almost new highs.

[politicianslie]

If he wants to win he needs a COVID exit strategy and a return to normalcy. That means firing Fauci and putting the squeeze on recalcitrant governors.

The ONLY thing President Trump has to do is let the good news propagate.

What's the good news? A very effective treatment has been found for COVID-19. 2200 COVID infected were treated with a drug combo, only TWO died (one was on chemo, second death was a VERY sick, VERY old individual who was given the drug combo).

YOUTUBE SHORT VERSION OF DRUG TREATMENT THAT WAS 99.7% effective for COVID-19

The long interview YOUTUBE

YOUTUBE The complete interview

The average American who looks at this will NOT make a single stock purchase until Dr. Fauci and his corrupt band of pharmaceutical parasites validate this NY doctor's findings. YES, the average American still believes what the deep state gubermint and their presstitutes tell us. But the market up day on news of an effective COVID-19 treatment will scare even me it will be so strong!

And Dr. Fauci and his band of criminal pharmaceutical owned Dr's will NEVER give a generic drug combo a pass. We need remesivir, which at $1000 a pill will help line Fauci's pockets.

And rwmesirir which has to be given while in hospital care will decrease the average hospital stay from 15 or 16 days down to about 10 or 11 days for COVID-19.

An interesting fact about Fauci!