Brace for a sudden, sharp rally for the S&P 500 in 2019, says strategist David Bianco

Welcome to the day that might make traders’ Christmas merry and brilliant or ship one remaining crushing blow to hope for a Santa rally.

A little bit optimism is peeking by as traders watch for considered one of the largest Fed selections in years. “Jerome Powell is damned if he does and damned if doesn’t on Wednesday,” the nameless blogger for The Heisenberg Report summed up properly.

And even when Powell tosses this market a bone with some dovish speak and even backs off a price improve, wariness abounds for 2019, with the so-called smart-money crowd sustaining an apparently bearish stance.

Our name of the day offers traders 12 causes to be bullish — they usually’ll want it. It comes from Deutsche Bank’s former chief U.S. fairness analyst David Bianco, who final week predicted a 5% to 10% rally in the subsequent month or so.

Brace for the S&P 500 to surge “suddenly and sharply,” says Bianco, now chief funding strategist at DWS, as he believes “now is one of the best entry points into U.S. equities.”

“Too many investors are missing the big picture in our view,” he says. “The known challenges and risks facing the global economy and equities are muted relative to the uncertainties during 2009-2016.” He sees the S&P 500 at 2,950 by the finish of 2019.

Since Bianco’s notice pubbed on Dec. 14, the S&P has had two very ugly periods and a fairly muted one Wednesday, however anyway listed below are his 12 bullish causes:

1) Economic enlargement will go on by 2020

2) Previously a “top bear growl,” U.S. households in fairly good monetary form

three) Corporate, financial institution stability sheets robust

four) U.S. company tax lower quantities to “important structural incentive change,” will most likely by no means return to 35%

5) Capital expenditure ought to maintain rising, industries that look for and assist secular progress alternatives are likely to do higher in the latter a part of an financial cycle.

6) Inflation, rates of interest nonetheless low vs. historical past

7) Current rates of interest counsel S&P 500 value/earnings ratio of 20 is truthful.

eight) Fund funding charges are low vs. historical past

9) Dollar, oil costs received’t set off S&P 500 revenue recession

10) Federal debt to GDP is manageable

11) China progress will sluggish, but it surely’s nonetheless large and a enhance to GDP

12) Europe will survive and the U.Okay. will get a last-ditch mushy Brexit deal

So stuff that in your stocking. Ho, ho, let’s go.

The market

The Dow

DJIA, +Zero.67%


SPX, +Zero.65%

 and Nasdaq

COMP, +Zero.56%

 are modestly larger in early motion.

The greenback

DXY, -Zero.51%

 is underneath strain, whereas crude

CLH9, +2.92%

CLH9, +2.92%

and gold

GCZ8, +0.13%

GCZ8, +0.13%

are flat.

GCZ8, +0.13%

Asian stocks

ADOW, +0.40%

ADOW, +0.40%

 had a mixed day, while European markets

SXXP, +0.27%

 caught a whiff of some global optimism.

Check out Market Snapshot for more coverage

The economy

The Fed statement and projections are coming at 2 p.m. Eastern Time, followed by a presser with Powell at 2:30 p.m. Ahead of that, third-quarter current account data and existing-home sales are on tap.

Read: The Fed must pull off a tricky balancing act

Opinion: How the idea of the Fed ‘stockpiling ammunition’ could blow up the economy

The chart

So, share repurchases soared 58% in the third quarter, the third straight record as companies put corporate tax savings to work. Our chart of the day from Wolf Street’s Wolf Richter looks at the quarter’s No. 2 buyback queen (Qualcomm

QCOM, +0.03%

 was No. 1)—Apple

AAPL, +0.04%

which he notes spent over $700 billion in 2018 on buybacks, and as shares tanked the latter part of this year.

“This is the vengeance of share buybacks. They accomplish absolutely nothing. But they waste huge amounts of money,” says Richter. He says Apple could have been inventing new things and building U.S. plants with that money and its market value has plunged nearly 30% since Oct. 3, he notes.

Note, the Bank of America Merrill Lynch fund manager found that for the first time since 2008/09, investors want companies to start improving balance sheets with far fewer asking for buybacks.

Read: The ‘smart money’ is the most bearish on stocks since 2008, says BofA survey

The buzz


FB, -1.82%

is down in premarket after the New York Times reported that it shared millions of users’ data with big partners like Netflix

NFLX, +2.38%


SPOT, +1.10%


MSFT, +1.29%


AMZN, +0.61%

In a blog post response, Facebook said it did none of that without consent, but Twitter is blowing up:

Global shipping blues — FedEx

FDX, -10.03%

 is tanking after slashing growth targets and saying it will offer buyouts.


GSK, +3.64%

GSK, +4.06%

 is fired up on news it will combine its consumer-health-care units with those of Pfizer

PFE, +0.09%

Eli Lilly

LLY, +3.29%

earnings also gave that pharma stock a boost.


MU, -3.38%

is tanking after the memory-chip maker’s outlook came up more than $1 billion short of already-lowered Wall Street expectations. But execs say everything will be OK.

General Mills

GIS, +6.29%


WGO, +16.23%

, Paychex

PAYX, +1.80%

 also reported Wednesday. Nike

NKE, +0.06%

 will report Thursday after the close.

Opinion: An earnings double whammy may add fuel to the fire on Wall Street

A massive IPO for Softbank’s telecom unit didn’t go so well in Tokyo.

Trade-talk chatter is heating up a bit after Treasury Secretary Steven Mnuchin told Bloomberg that the U.S. and China will meet in January to talk about a truce. He made headlines Tuesday blaming market volatility on the Volcker rule and high-frequency trading.


TSLA, +0.41%

 CEO Elon Musk unveiled his underground transportation tunnel on Tuesday, taking reporters and invited guests for a spin in a Model S.

Check out: MarketWatch’s annual list of the must-follows on Finance Twitter

The stat

39,773 — that is how many Americans died from gun injuries in 2017, the biggest yearly total on record, says new data from the Centers for Disease Control and Prevention. Close to two-thirds of those deaths were self-inflicted.

Random reads

Trump must sell an autographed Broncos helmet

College sportswear has been traced to Chinese internment camp

Hackers downloaded thousands of cables from the EU’s diplomatic network for years

When you dog Canada’s health system get ready for the “third-degree burn”

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