Sumthin’ or Nuthin’ – What’s the Verdict on the Market?

Sheaff Brock's perspective on whether the bull market will continue in 2017

Sumthin’ or Nuthin’ – What’s the Verdict on the Market?

“For next year, no strategist at a top Wall Street firm forecasts that the bull market will end,” writes Akin Oydele in Business Insider prior to the end of 2016. In fact, Oydele adds, “many expect America’s largest companies to return to earnings growth.”

To put it in the vernacular of Dave Gilreath’s brother-in-law, market performance in 2017 looks to be a real “sumthin’.” (Gilreath, a Sheaff Brock Managing Director and its Chief Investment Officer, has a brother-in-law who rates all things as either “sumthin’” or “nuthin’.”)

Business Insider took an informal survey of what some of the pros are saying about the S&P in 2017:

  • Andrew Garthwaite of Credit Suisse:
    “The key positive for 2017 is that investors are overweight deflation hedges (i.e. bonds) relative to inflation hedges (equities) at a time when policy makers are moving…towards fiscal stimulus.”
  • Julian Emanuel of UBS:
    “Despite the potential for more volatility, we expect the Bull to celebrate its 8th birthday in March of 2017.”
  • Tobias Levkowich of Citi:
    “Our PULSE framework is …still positive on valuation”
  • David Kostin of Goldman:
    “Hope is potential for positive EPS revisions from lower corporate taxes, repatriation of overseas cash, less regulation, and fiscal stimulus.”
  • Liz Ann Sonders, Brad Sorensen, Jeffrey Kleintop of Schwab:
    “There has been a definitive sector rotation indicating more confidence among investors. We believe the bull market will continue.”

“What is striking,” says Sheaff Brock’s Gilreath, “is how stocks have pretty much done nuthin’ for two or three years. Maybe sumthin’ is comin’?” In stock markets of the past, he points out, long periods of nuthin’ have been followed by even longer periods of sumthin’:

  • The churning market of the 1930s to 1950 was followed by a big run in the 50s and 60s with the end of the depression, WWII, and infrastructure spending serving as catalysts for the comeback.
  • The 1966-1981 flat period was followed by a big bull run in the 80s and 90s, with the catalysts being tax and regulation reduction, the end of the Cold War and global trade.

Could the catalysts for the next “sumthin’” be tax and regulation reduction paired with infrastructure changes? Gilreath asks.

Might we be on the brink of the next “sumthin’”?

Share this post