“We expect the next 5%+ S&P price move to be up and soon.”
That’s the gutsy call Deutsche Bank’s chief US equity strategist, David Bianco, made in a note to clients on Monday. It follows what’s been the worst-ever start to the year for the stock market, which has seen the S&P 500 plunge 8% in just two weeks.
“We are not panicked by this correction because we understand it,” he said. “It’s driven by a profit recession centered at certain industries caused by factors that we’ve long flagged as risks with detailed research and quantified sensitivities.”
Bianco’s no stranger to making contrarian buy calls when stock prices are tumbling. As the market was correcting during fall 2011, he cranked up his target for stocks and told clients to buy, drawing all sorts of nasty criticism. His call was later proved right.
In recent years, he’s been one of the most cautious strategists on Wall Street. He’s been vocal about the problems with corporate profits. And he’s been outright bearishabout the market’s near-term expectations for energy-sector profits. With his note on Monday, he joins his peers who have been slashing their outlooks for earnings.