By Senad Karaahmetovic
While most U.S. equity strategists, including those at Morgan Stanley, Goldman Sachs, and Bank of America, continue to warn their clients that U.S. stocks are likely to revisit 2022 lows, Credit Suisse strategists are staying on the other side.
Morgan Stanley's equity strategists said earlier this week that they are growing increasingly convinced that the S&P 500 will hit the low 3000s next year. Even JPMorgan, one of the biggest bulls on the Street in 2021, has recently turned bearish and trimmed its risk exposure.
Credit Suisse's equity strategists are well-known Wall Street bulls. In the closing weeks of 2021, CS was one of the few to remain bullish on U.S. stocks despite swollen valuations. A year later and they are one of the very few research firms calling for solid returns in U.S. stocks.
In the latest note sent to Credit Suisse's clients, strategists said the rising consumer confidence is bullish for stocks. Strategists "blamed" the rise in consumer confidence on falling inflation and gasoline prices, higher wages, and abundant job openings.
"CPI is expected to fall 4-5% over the next 12 months, wage growth should remain sticky at elevated levels, and labor market tightness is likely to be persistent, leading to further upside in confidence measures. Cost of living adjustments for retirees, and many government workers, will add further to consumer purchasing power," they wrote in a client note.
This type of environment "should lead to stronger spending, delay the onset of the next recession and extend the market rally," strategists concluded.
S&P 500 closed at 3,878.44 yesterday, down 18.6% year-to-date (YTD).