“The resurgence of the virus in the southern states and the leadership of Joe Biden in the polls are probably reducing some of this volatility that may have occurred later in the year,” said chief market strategist at Canaccord Genuity at CNBC Trading Nation. Tuesday. “We want to use it to add a little bit of risk incrementally. ”
In the short term, Dwyer believes stocks are in the consolidation phase in a new bull market.
He says the market is in a much better position than it was in March when the virus started to rage. According to Dwyer, the big difference now is the unprecedented political support from the Federal Reserve.
“The Fed has made it clear that it will continue to print money to support the credit market until it achieves its dual mandate of full employment and 2% core inflation,” said he declared. “It won’t last long. ”
As for politics, Dwyer thinks the market will adapt. If Biden wins the White House, he believes the Fed will offset potential tax cuts by becoming even more aggressive.
The backdrop prompted Dwyer to upgrade his S&P 500 goal from 12 to 18 months to 3,300 or more, up from 3,000 this week. The move reflects a minimum gain of 6.5% since Tuesday’s close, as the index closed its best quarter since 1998.
“It sounds a little weird. What does more mean? The reason is that I have no idea what value to use when I have an unlimited printing press, “he said.
His bull affair reflects successful efforts to contain the coronavirus and the extreme support from the Fed.
“On the weakness that we consider volatility, we want to buy these areas of economic reopening because of this stimulus from the Fed,” he added. “Once you turn on the switch, once there is a vaccine, it will create an environment where you are going to have quick economic activity. ”
And that’s why Dwyer is targeting cyclical market areas.
” It’s just post-recession trade, “said Dwyer. What generally happens after a recession is that you want to be long [in the] areas of economic reopening such as finance, industry, materials [and] consumer discretionary. ”