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FUTURES NOW

‘Horrific’ sentiment could cause

investors to miss double-digit year-
end rally: Wells Fargo’s Chris Harvey 
PUBL I S H ED WED, N OV 28 2018 • 8:00 A M E ST

Stephanie Landsman
@STEPHLANDSMAN SHARE     

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VIDEO 01:46
Fed warns that a ‘particularly large’
‘Expect double-digit returns’ between now and early plunge in market prices is possible if
2019, Wells Fargo’s Chris Harvey says
00:00 / 01:46
risks materialize

Wells Fargo Securities’ Christopher Harvey believes stocks are on the cusp of
a sharp turnaround.

According to Harvey, conditions are ripe for a blast higher into next year.

His issue: Not enough investors believe it.

“We do expect double-digit returns,” the firm’s head of equity strategy said
Tuesday on CNBC’s “Futures Now. ” “A fair amount of value has been
uncovered in the sell-off. When we look to the buy side, sentiment is horrific.
De-risking is extreme.”

Harvey has a 2,950 year-end price target on the S&P 500, about a 10 percent
jump from current levels. He believes it’s possible the rally could come in just
shy of that level, but not by enough to alter the forecast.

“The fundamentals, while not pristine, are rather good. We think we can
work higher from these levels,” he said.

It’s an optimistic forecast coming from a market watcher who has said he’s
“not a real positive guy. ” Harvey prefers to err on the conservative side when
he builds his forecasts.

“There’s a lot of value on the ground right now. We’re at 15 times forward
guidance, and we want clients to take that opportunity,” Harvey added.

That doesn’t mean it’s necessarily all smooth sailing. Harvey acknowledges
there are risks in the marketplace, namely the Federal Reserve interest rate
hike policy and potential fallout from the U.S. trade war with China.

“We think at this juncture if rates are going higher because growth is stronger,
that’s fine,” said Harvey.

As for the China-U.S. trade tensions, Harvey said manufacturers pulling out
of China due to tariffs could present challenges for the global economy. But
he sees this as an opportunity.

“If bad things do come to fruition, we think you get more like low to mid-
single digits [percent] between now and year-end. But ultimately there’s value
in the marketplace,” said Harvey. “If you can collect that value, ... you’ll be
able to exploit it.”

Market rally ahead?

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December?

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S&P 500 INDEX | INVESTMENT STRATEGY | MARKETS | STOCK MARKETS |

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