Credit Suisse’s Jonathan Golub Prediction in Focus; Market Will Hit Record High This Year

Market bull Jonathan Golub said stocks will make another record run this year just as the Dow sank back into correction territory.

The Credit Suisse chief U.S. equity strategist believes Wall Street is making a mistake by not embracing an unprecedented first-quarter earnings season.

“It’s really strange. We’re seeing the best earnings season maybe ever. Twenty-five percent year-over-year growth in the ninth year of a recovery, and companies are beating by 8 percent,” Golub said Wednesday on CNBC’s “Trading Nation.” “But the market’s response to this is far more muted than normal.”

His thoughts came shortly after the Federal Reserve made its most recent decision on interest rates, leaving them unchanged, but noted it detected inflation.

“I’m generally a believer that we overemphasize the importance of the Fed as opposed to the economic backdrop and the earnings backdrop,” said Golub.

The market didn’t welcome the Fed’s assessment. Stocks finished the Wednesday in the red.

The Dow has now dropped more than 10 percent below its Jan. 26 intraday all-time high of 26,616.71. The S&P 500 is now 8 percent below its intraday record high of 2,872.87 from that same date.

Despite the leg down, Golub anticipates a comeback. He predicts the S&P 500 will rally about 13 percent to 3,000 by year-end.

“This eventually powers through. Take a look at stocks. They started the year with a forward P/E [price to earnings ratio] of 18x. Recently it is a forward P/E of 16x,” Golub said. “Stocks, if they don’t rally, are going to get cheaper and cheaper.”

Source: CNBC

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