Wall Street bear changes his tune

Barry Bannister raises his year-end target for the S&P 500 to 2,300 but says getting there won't be easy.

By MSN Money Partner Aug 25, 2014 11:50AM
Image: Stock market Bear © Hemera Technologies/JupiterimagesBy Bruno J. Navarro, CNBC

One of Wall Street's biggest bears just did an about-face with his outlook for stocks.


Barry Bannister, chief macro and portfolio strategist at Stifel Nicolaus, raised his year-end target for the Standard & Poor's 500 Index ($INX) by 20 percent, from 1,800 to 2,300.


"Well, it's definitely a bull market when a flat view is the most bearish view out there," he said Friday on CNBC's "Halftime Report."


Bannister noted that the 7 percent gain for stocks year-to-date is "exactly in the middle in August-to-date changes for the S&P in the last 100 years. It's a pretty ordinary market."


Low interest rates and a long cycle, he added, "don't really create value. What they do is they reallocate price. And so, what you're doing is front-loading the market return."


Bannister said that he was pleased to see that loan growth had picked up and added that he was "encouraged" by comments Federal Reserve Chair Janet Yellen made Friday.


"I thought her paper was more of a wonkish, collaborative, conference-type paper -- I've been to a lot of conferences," he said. "It's sort of, 'here's both sides. What do you guys think?' But I would watch inflation and wages from here on out."


Bannister also said that he thought a "zero percent real Fed funds, which is 2½ nominal" by Dec. 16 was too aggressive. "We're not going to get there."


Achieving his new price target won't necessarily be easy for the stock market, he added.


"Remember, the easy money is a cycle is made in the first two-thirds of a cycle. After that, you really do have to get the earnings and the economy right. And you have to get out before there's any sort of recession signs," he said. "So, we're in that last one-third of the economic cycle, but we are about 5½ years into bull market, and it could become a secular bull market that crosses the six-year mark next March.


"I wouldn't look for a lot of growth from here. It'll definitely be a case of margins starting to peak, but top lines starting to pick up, particularly exports."


More from CNBC



15Comments
Aug 25, 2014 1:57PM
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So he's predicting a 15% move up from here in the next 4 months?  Wow....

It is interesting that this latest run is happening in conjunction with a strengthening USD.
Aug 25, 2014 12:36PM
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"Low interest rates and a long cycle, he added, "don't really create value. What they do is they reallocate price. And so, what you're doing is front-loading the market return."

Anyone that truly understands that part of the article knows exactly what I have been stating for well over a year now. There is no Free Ride. There will be a Day of Reckoning. This Market has been a Gift and a opportunity to make back all the gains plus some since the Great Recession. However, we all know how this story ends, even if you won't admit to it today. Eventually folks won't have any other choice.

This is literally the biggest Debt and Leverage Bubble in World History. So today, what do the Central Banks do, Full Steam Ahead, double down on the Fake Money Printing. Insane. Well at least after the next Great Recession part II, the Central Banks will likely be ended. Nobody in their right mind will allow these corrupt entities to continue their fraudulent existences.
Aug 25, 2014 2:36PM
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Yellen needs to get her lips off of these Wall Street crooks asses and do what is right for the rest of the country.
Aug 25, 2014 6:02PM
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These guys actually get paid to make predictions?
Aug 25, 2014 12:51PM
Aug 27, 2014 7:41PM
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He is predicting over a 20% return for the year after a 30% return last year. Regression to the mean is going to be a bytch when it comes. 
Aug 25, 2014 4:03PM
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Gosh, can Mirhaydari be far behind?  Stay tuned tomorrow....
Aug 26, 2014 7:01AM
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Low interest rates allow unworthy things to have legs they cannot normally stand on. Anyone who has ever managed a credit portfolio following a low rate period knows for a fact that garbage can and does fester in the portfolio then go toxic and compromise it. Viable interest rates exist to set the threshold of sustained viability, not discrimination. 
Aug 25, 2014 7:18PM
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It is more likely for stock certificates to become debt notes demanding repayment plus interest for all the fiat money printing, than for them to be worth anything very soon. 
Aug 25, 2014 4:18PM
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Well, nothing to complain, we were up 75 in the Dow and most importantly almost 10 in the S&P; now, if we compare it to earlier today when we were up about 125 in the Dow and about 14 in the S&P, it makes you think....Folks, manipulators will never go away and will always try to bring these markets down, doesn't matter where we stand, remember, they make their money by dropping us, by cheating and stealing from the rest of hard working Americans....Not a bad close today but, believe this, be very very careful tomorrow.
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