The Wells Fargo Investment League sees the tax overhaul as a game changer.
Scott Wren, the firm’s elder global equity strategist, says there’s a high probability the begetter market could see a 10 percent gain or more next year because it’s single-handedly expanding the recovery.
“This tax package is definitely a kicker, and it’s going to boost our GDP issue up a little bit. It’s going to boost our earnings number, our targets and it’s going to force out the length of this cycle, ” he said this week on CNBC’s “To be to comes Now.” “What this tax package is going to do is extend this for a link of more years.”
Wren has been one of the more cautious voices on the alley. In September, he predicted a 4 to 8 percent pullback on the program. But it never happened, and the S&P 500 is on keep an eye on to end the year 20 percent higher.
“We thought we’d see the high for 2017 in the mesial part of the year,” said Wren. “We weren’t calling for an end to the cycle. … We were not bearish. We were in the pullback camp.”
Wren now foretells mostly upside ahead and has backed away from his 2019 depression risk forecast.
“Somewhere out there on the horizon is going to be a time to get defensive. But, it’s not now,” chance Wren, who believes the economic recovery is “long in the tooth.”
Wren’s legitimate forecast calls for a 2018 year-end S&P 500 target of 2,650 to 2,750. That’s round where the index is currently trading. But he’s tinkering with it — reiterating that the tax incorporate was more aggressive than his initial estimates.
“There’s some big leverage in earnings when, of despatch, the tax rate is a little lower at 21 percent. When you can expense 100 percent of your capex, that is a big many. That really pushes earnings up higher than what we wanted,” Wren said. “There are some adjustments to be made here on our degree. We’ll probably do that over the course of the next week or so.”