S&P 500 Can Hit 5,000 by end of 2024, Says Federated's Orlando

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Bloomberg 11/21 03:45 · 12.7k Views

Phil Orlando, chief equity strategist at Federated Hermes, says the firm is “all-in on this equity rally,” as they see it as the second leg of a bull market.

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  • 00:00 You have more confidence that yields full from here or the stocks ran from here I'VE got equal confidence in both that that we'VE got a deccceleration in economic activity in our chief investment officer Steve oth has been instrumental and put together this soft landing rocky landing thesis we think the next couple of quarters from a GDP standpoint are going To Be decidedly slower and we saw in the third quarter um as a result we're we're.
  • 00:30 All in on this equity rally ah we thought that it forty one hundred ah I guess about a month ago ah the federal reserve is done in terms of raising interest rates they're on hold they'going To Be on hold till the back half and next year um so we expect that that bond yields arere going To Grind lower they'VE gone from five percent to four and a half percent we think that stocks are going To Grind higher they'VE gone from forty one hundred to forty five hundred and we think that's a trend that's got likes so I the only one.
  • 01:00 To remember this it's always good to quote the Dow on a Monday morning Phil I'm going To Go back to nineteen seven seven and the Dow was eight ninety four we had a first leg of a bull market out of seventy four and then some real not malays but you know just some ased and then boom in seventy seventy it began is just the second leg of a bull market.
  • 01:21 We think it is and and we think the federal reserve has done everything it needs to do in terms of creating that positive relationship between where's the upper band of the funds rate at five and a half percent now and and where's nominal annualized CPI inflation which is three point two percent so the feds finally achieve what it needs to do and on top of that.
  • 01:43 The bond markets on the heavy lifting for it since since the last Fed rate hike in July a benchmark ten year treasur YS have gone from three seventy five up to five percent.
  • 01:55 That gives the Fed the luxury in my view to step back and say you know what we don't have to hike anymore we can just sit here on the sidelines for the next year and and allow the the the the gradual slowing of inflation of occur when you talk about grinding higher when it comes to equities in grinding lower when it comes To Bond yields how much is this actually lead to outside gains versus just basically not losses.
  • 02:24 Well we think there will be outside gain because if you you know I gave you a little snapshot of our target for this year from forty one hundred to forty six hundred but as we look out to next year we we think the s and p five hundred can hit five thousand by the end of the year and depending upon how the economy plays out next year and certainly the results of the election.
  • 02:45 Next November a year from now we're going To Be critically important the the the potential prospect of of more business friendly more market friendly fiscal policies could allow that rally to continue up in the twenty five and twenty six period so we could have a really nice couple of year period here but obviously there's a couple of shoes that that need to drop and fall in a place here in order To Be able to make that forecast with a higher degree of confidence.