Deutsche’s David Bianco “Forecasts” The S&P (In One Simple Chart)

Jon Alternative Media, Banking, Blogosphere, Economy

While not exactly a “bear”, Deutsche Bank’s David Bianco – until this weekend – had the lowest S&P 500 target for 2014 year-end at 1,850. That’s all changed now…
Laszlo Birinyi would be proud…

Via Deutsche Bank,
We raise 2015 yearend S&P 500 fair value target 7.5% to 2150 from 2000
We still expect a long lasting economic expansion of moderate growth, which should rival the US record of 10 years with S&P EPS growth averaging 6% until the next recession, on 5% sales growth, flat margins, 1% share shrink. Despite entering the latter years of a typical expansion and high margins vs. history, we now think the trailing S&P PE should average 17 vs. 16 until elevated recession risk returns. This is because we now expect long-term real interest rates to stay below normal through 2016 and thus lower our S&P 500 real cost of equity estimate from 6.0% to 5.5%. We raise 2014 and 2015 yearend S&P targets to 2050 and 2150 from 1850 and 2000 and introduce 2300 for 2016 yearend.

This post was published at Zero Hedge on 09/08/2014.