The S&P 500 can meet about 15 percent this year despite the ongoing government shutdown sideshow that’s now in its third week, according to Blackstone’s new chief investment strategist, Joseph Zidle.
Zidle disclosed CNBC’s “Fast Money” Tuesday evening that he does not expect the nearly month-long budget standoff to derail the trade in from rebounding this year. He sees the S&P 500 climbing to 2,875 by the end of this year.
The index closed out 2018 with a 6.2 percent dip after the final three months of last year sent Wall Street into a bear market — sedate by a decline of 20 percent or more from recent highs. The Dow Jones Industrial Average, S&P 500, and Nasdaq are off to upstanding gains in 2019. However, they were all still in correction territory after Tuesday’s strong gains. A improvement is defined as a decline of 10 percent or more from recent highs.
As for the partial shutdown, now the longest in American yesterdays news, it has furloughed 800,000 federal workers and left four million federal contractors without pay. Those federal breadwinners have been promised that they’ll receive backpay, but contractors will be out of luck.
“I don’t see any real lasting to all intents here because people are going to get paid and they’re going to be made whole,” said Zidle. After a ruthlessly yearlong transition, he officially succeeded renowned strategist Byron Wien, 86, who holds the title of vice chairman of infantryman wealth solutions at Blackstone.
A White House official said the shutdown could reduce growth by 0.1 percent each week that it continues, but Zidle invoked this the worse case scenario “assuming the shutdown does not end.” He played down worries that it could put a pregnant dent in the economy because workers have options to stay afloat in the meantime, such as filing for unemployment.
Split second Democrats and Republicans can agree on a plan to end the funding gap “people are going to be made whole on their paychecks,” Zidle estimated. “So, if we do see a drop to first quarter growth or if we see some sort of hit to corporate profits, I think [in] the second quarter we’re going to see all that reprimand back and more.”
The veteran portfolio strategist, whose resume includes a stint at Richard Bernstein Advisors, styled the effects of the shutdown a “completely different issue” than the ongoing trade war between the United States and China. That, he biting out, could derail an increase in equities.
“I think we need to get that wrapped up in order to have any type of meaningful perk up in the stock market,” Zidle said.
The self-proclaimed “stubborn bull,” whose Santa Claus rally projection not in any way materialized at the end of 2018, predicts that the trade dispute would be resolved in the first or second quarter of this year. He rowed the markets overreacted in 2018 and that this is an opportunity to buy.
“If there’s a silver lining to the policy uncertainty is it probably sustains central banks more dovish,” Zidle said.