Market bull Tony Dwyer sees more sharp fluctuations when the second half of the year begins due to the sharp increase in the number of cases of coronavirus and the growing chances for Joe Biden’s presidency.
But this does not affect his optimism.
“The resurgence of the virus in the southern states and Joe Biden’s leadership in the polls are likely to draw out some of the volatility that could happen later this year,” Canaccord Genuity’s chief trading strategist told CNBC on Tuesday. “We want to use this to add a bit of risk gradually.”
In the short term, Dwyer believes that the stocks are in a phase of consolidation in the new bull market.
He argues that the market is in a much better position than in March, when the virus began to rage. According to Dwyer, the big difference now is the unprecedented support of the Federal Reserve.
“The Fed made it very clear that it intends to continue to print money to support the credit market until it receives a double mandate for full employment and 2% of core inflation,” he said. “It won’t be for a while.”
Regarding politics, Dwyer believes that the market will improve. If Biden wins the White House, he believes the Fed is offsetting potential kickbacks from tax cuts, becoming even more aggressive.
Von forced Duyer to upgrade his S&P 500 from 12 months to 18 months to 3,300 from 3,000 this week. The movement reflects a minimum increase of 6.5% since Tuesday’s close, as the index completed its best quarter since 1998.
“That sounds a little strange. What does plus mean? The reason is that I have no idea which rating to use when I have an unlimited number of printing machines, ”he said.
His bullish case reflects successful efforts to contain the coronavirus and continued extreme support from the Fed.
“As for the weakness, which we see as volatility, we want to buy these areas opening up in the economy because of the Fed’s incentive,” he added. “As soon as you turn on the light switch when the vaccine appears, it will create an environment in which you will have high economic activity.”
And that is why Dwyer focuses on cyclical areas of the market.
“It’s just trading after the recession, ”said Dwyer. – What usually happens after you exit a recession is that you want to be long [in the] areas of economic discovery, such as finance, industry, materials [and] consumer discretionary. “