BofA Strategist raise SPX Forecast from 1400 to 1450 While Greece 1Y Bond Hits 122%

As seen on BloombergTV and reported on ZeroHedge:
Just when one thought Wall Street could not become more full retard, here comes David "Kermit" Bianco who, perfectly oblivious of the world ending one broke European country at a time, has just released the following: "S&P 500 2011 year-end target remains 1400, 12-month target raised to 1450 from 1400 12-month target raised on time value and conviction in 2012 EPS being ~$100 barring recession." Barring recession? Has this "strategist" even looked at a TV in the past three months, let alone exited the island of lunatic asylum that is Manhattan? But wait, the humor continues, although we are 100% confident this joke of a snake oil salesman will be on CNBC any minute. As a reminder, Bianco had an S&P price target of 1650 until October 6, 2008, orafter the Lehman bankruptcy. He would end up being off by only well over 100%.
Key views and expectations:
  • No US recession – but balance sheet repair and government policy angst weigh on GDP growth for extended period
  • Global economy stays healthy (4.5%) in 2012, despite weak US (2.3%) and European (1.4%) growth, thanks to Asia
  • In correction territory (under 1230), S&P 500 priced for a mild to avg. US recession. ~1200/~14x implies ~$85 2012 EPS
  • No Fed Funds rate hikes until 2014, 10yr Treasury yield 3% at 2011 end, 4% at 2012 end and below 5% until 2015
  • Oil prices stay high (WTI $85-100/bbl) but do not spike to new records – high commodity prices stimulate capex
  • US business spending on equipment and software to rise at healthy pace, which benefits Industrials and Technology
  • 2012 S&P EPS growth of 7% outpaces US GDP, led by S&P foreign (~40%) and business spending (~25%) exposures
  • The huge disconnect between PE ratios and interest rates will spur acquisitions, share repurchases and dividend hikes
  • We prefer high dividend growth stocks over high dividend yield stocks.  S&P 500 DPS estimates: 2011 $28, 2012 $38
  • Overweight sectors most foreign and B2B exposed, underweight sectors most consumer and govt. spending exposed
  • Discipline & courage earn gains – S&P 500 typically rallied 15%+ Sep-Jan when priced for a recession that didn’t come

Thinking that equity markets are only down 1% or the US indices only down about 15% from the May top makes me wonder how much more denial can the market take?

As I like to say, denial is the best friend of the bears.


Tiho said...

One sided articles on the blog. There is another Bloomberg article which shows several other banks actually cut forecasts and capitulated, with one of the banks lowering it to 1250.

I have historical data of this, and the way it tracks the S&P is interest. Bank anaylists always forecast prices higher then present. However, when they get too bullish and have a spread to the current price higher than 20%, market usually tops, like in 2000 and 2007. But when these idiiots start to capitulate and the spread lowers, market bottoms, like in 2002 and 2009.

I guess you have go see the chart but let's just say we are closer to the bottom as majority have started capitulating. A final nail in the coffin will be the last sell off we are waiting for if Greece & Co goes bust. Than I'll start buying and shorting the Dollar!

pej said...

Show me chart dude!

The bunch of analysts all lowered their targets, but they are still 10-15% higher the current spot price. This seems way too bullish to me.

Morever, everybody on BloombergTV is saying to buy stocks. All investments managers are on the same side of the boat. NONE believes that anything serious could happen... We're only down 15% from the peak, but given the macro economic situation, we should be far lower.

Basically, equity traders forgot that the equities are not being traded in a shielded environment from what is happening in the rest of the world.

Still, show me the chart, you got me interested!

Tiho said...

As long as you dont post it around the web.


Tiho said...

Also, yes I think we will go lower below August 09th. But I think only about 50 points or so lower towards 1040. I think we will capitulate by then?

pej said...


Looks like we're going higher before going lower... Look at this general bullishness. Any rumor make the market jump 1-2% in a matter of minutes but when the rumor is denied, the market doesn't come back where it was!

pej said...

Yes, sure won't be posting it anywhere. You can reach me at spam dot recycler at GMAIL dot com.
Cheers mate, I appreciate.