SuperBull Club: RBC Ups Morgan Stanley, Says Bull Market to Continue 6 Years; Sobering Alternative View from GMO
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RBC Capital Markets chief U.S. market strategist Jonathan Golub joined the SuperBull Club today. Golub says Years Left to Go in S&P 500 Bull Market.
The U.S. economy’s slow recovery may extend another six years, potentially doubling the duration of the bull market in equities, according to RBC Capital Markets chief U.S. market strategist Jonathan Golub.Upping Morgan Stanley's 5-Year Prediction
Bull markets tend to continue until an economic cycle runs out, usually after about seven years, Golub said in an interview with Bob Moon on Bloomberg Radio. Given the pace of the current economic expansion, he said the cycle could last 12 years or longer, providing investors with reason to continue buying stocks.
“We’re going to see a lot more upside to the stock market,” Golub said. “This is going to go on for long enough that many Americans are going to be able to participate in the run higher.”
The Standard & Poor’s 500 Index has more than tripled during the current bull run, which at 76 months is the second longest in the past 60 years.
He forecasts the benchmark index will end the year at 2,325, the fourth-most bullish forecast in a Bloomberg survey of 21 strategists.
Gulub upped the forecast of Adam Parker, Morgan Stanley's chief U.S. equity strategist.
On Monday, Parker stated his belief: Another 5 Years to Bull Market.
I commented "The bulls are attempting to outdo each other as often happens at or near market tops. But who's to say this is a top? Why stop with a 5-year rally? Why not 10 or 20 years? Why not forever? There's plenty of room for more optimism, and this bull market won't end until we see every ounce of it."
It seems fitting that it took only one day for RBC to up the forecast of Morgan Stanley. Surely, someone can outdo six more years.
SuperBulls, it's time to strut your stuff.
Sobering Alternative View from GMO
In contrast, to the SuperBulls, I present the 7-Year Real Return Forecast of GMO.
*The chart represents real return forecasts for several asset classes and not for any GMO fund or strategy. These forecasts are forward‐looking statements based upon the reasonable beliefs of GMO and are not a guarantee of future performance. Forward‐looking statements speak only as of the date they are made, and GMO assumes no duty to and does not undertake to update forward‐looking statements. Forward‐looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results may differ materially from those anticipated in forward-looking statements. U.S. inflation is assumed to mean revert to long‐term inflation of 2.2% over 15 years.
Rain on the SuperBull Party
Note that GMO expects negative real returns in US stocks, on average, for a full seven years.
I hate to ruin a SuperBull party with forecasts that have been historically among the best in the world, but so be it.
Mike "Mish" Shedlock