10 Monster Stock Market Predictions For 2021

3.) Faster GDP Growth, higher inflation, and a steeper yield curve will make the traditional money center banks the best performing sector for the first half of 2021.

2.) Better than expected GDP, faster inflation, and higher bond yields will result in investors worrying that the Fed will raise rates much sooner than expected. The Fed will hold to its word and not raise rates in 2021 by calling the rising inflation rates as transitory, remaining committed to the low rate and its bond-buying programs.

1.) The S&P 500 will struggle in the first half of 2021, something nobody is expecting. Worries over Fed tightening or reduced bond purchases will contract the S&P 500 earnings multiple.

The S&P 500 earnings yield is currently around 5.25% based on 2022 earnings estimates. However, it will rise to 6%, its previous low, sending the S&P 500 PE ratio to around 16 based on my 2022 earnings estimates of $193. This will send the S&P 500 back towards 3,050.

However, as fears subside and inflation rates fall and return to below the Fed’s target, the S&P 500 will recover and finish the year higher at 3,860, a gain of over 4% for the year.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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