Raising our market forecasts for 2021

While we maintain our conviction that the S&P will finish 2020 at around the 3,650 level we’re raising our forecast for 2021 to 4,200 from our earlier estimate of 3,850. We feel the higher target is appropriate given the historically low interest rates which should allow for higher than normal market multiples. Adding to this is what we believe will be massive amounts of additional fiscal and monetary spending that is always supportive for equity markets.

 

Much of this is true in Canada as well. To quote Brian Belski, BMO’s Chief Equity Strategist  “As America Goes, So Goes Canada” so we’re revising our 2021 S&P/TSX forecasts higher to from 18,700 to 19,500 for similar reasons, though we believe that fiscal and monetary support will be more moderate than in the US. We feel that at present; forward earnings estimates are too conservative and that companies will build on the recovery in earnings we’ve been seeing of late as more areas of the economy adapt to the pandemic and move towards more normal level throughout the year. 

 

We are in the midst of a 20-25 year bull market and the second half is now underway. Growth is not dead. It might be scarce, but it is not dead, and when growth is scarce, growth outperforms.

 

If you have any comments or questions about our forecast, please contact us

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