Investors can stop worrying about a major obstacle blocking a year-end rally, according to one of Wall Street’s biggest bulls.
B. Riley FBR’s Art Hogan sees the weekend’s truce between the U.S. and China on trade as a market driver for the next four weeks.
“China, the rhetoric, really was heating up over the course of October and November, and now it feels as though we’ve got a path to finding an exit on the trade war highway,” the chief market strategist said Monday on CNBC’s “Trading Nation.” “That’s going to be helpful.”
Stocks were down Tuesday after kicking off the month with strong gains. The Dow on Monday grabbed 287.97 points to close at 25,826.43 and the gained 30.20 points to close at 2,790.37. That’s about 4 percent away from Hogan’s S&P year-end target of 2,900.
Also, in the past two days, the dollar is down 1.75 percent against the Chinese yuan. On Sept. 11, the dollar also fell after a report indicated senior U.S. officials were looking to jump-start trade talks with China
“Notice how much the dollar has come off every time we get better news on trade. I think that continues the more better news we get on trade,” said Hogan. “And, I think a weaker dollar here is certainly going to help our multinationals and help our concerns about emerging markets.”
Despite his overall optimism, Hogan says economic and earnings growth will slow down next year.
“We’re not going to duplicate the sugar high that we had in 2018,” Hogan said, adding that the year-old fiscal stimulus will no longer appear in the data comparisons. Plus, he believes the Federal Reserve will hike interest rates three more times in the next 13 months, a move that will tilt in favor of more conservative growth.
Yet his 2019 S&P year-end target is 3,250, a 15 percent jump from current levels.
“The good news we don’t have to factor in tariffs or at least the magnitude of tariffs we thought we’d have to factor in,” Hogan said. “We’re in a better place than we were a week ago.”
