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Market is melting up to new records, but 2022 looks rough: Wells Fargo


Chris Harvey won’t be the biggest bull next year.

The Wells Fargo Securities head of equity strategy, whose 2021 S&P 500 target is 4,825, predicts Wall Street will stage a vibrant year-end rally and then see a losing 2022.

“You are going to take equities up to a level they can’t sustain. CNBC’s CNBC spoke out about the “equity market meltdown”.Trading NationOn Friday, ” “We’ll get stocks down to a point where their fundamentals and values don’t support them.”

The S&P 500 NasdaqAnd DowThe week ended in record territory. The S&P and Nasdaq were up 7% in October while the Dow gained 6%.

Many investors and people feel that the market can’t be stopped at any time. There have been many pullbacks. Harvey said, “You’ve bent it but never broken.” That brings you another level of FOMO [fear of missing out]This gives you a sense of security.

Harvey points to strong economic fundamentals as well as higher-than-expected earnings and low capital costs.

It’s late in the bull marketHe said. This is an era when rationality becomes more rational. It is possible for things you didn’t anticipate to occur, and they most likely will.

Harvey contends momentum namesThe banks and other financial institutions will continue to drive the year’s end. He called financialsA “stealth leader play” to gain traction from taper plans by the Federal Reserve.

Bottom fishing is not a good idea

Harvey said, “That will cause upward pressure on interest rates, which is good for banks.” We want to purchase things that work. “We don’t want bottom fishing.” “We don’t want broken stories.”

He suggested playing the iShares MSCI USA Momentum Factor ETF

He noted that “the funny thing is that a lot people think these stocks are all-tech and high tech.” If you take a look at the Momentum ETF’s momentum index, 20% is held in banks. Three of the top ten banks in the Momentum ETF are also banks. This gives you a lot of diversity.

Harvey believes the market meltdown could last between three and six months. Harvey expects the second quarter of next year to see a Fed that is more hawkish, slower growth, and uncertain outcomes surrounding mid-term election results. This could lead to a 10% correction.

This comment is horrible, but it’s what I am going to say anyway. Harvey stated that Harvey believes this is an’sell in may and forget’ strategy. You want to be more defensive when you reach the end of spring or early summer.

It’s still considered early for firms to deliver next year’s S&P targets. Harvey’s goal is 4,715. Credit Suisse’s Jonathan Golub has been the most bullish estimate. who has a 5,000 S&P target