US still in a bull market: RBC Wealth Management

Oil price volatility
Good signs in the oil market?   

U.S. shares are still in a bull market, despite the volatility currently grabbing global attention, Alan Robinson, global portfolio manager at RBC Wealth Management, told CNBC.

"We are we think in the middle of a bull market expansion for stocks. Bull markets don't die of old age, they die of speculative excess and I'd argue that we are far away from that level at the moment," Robinson told CNBC's Squawk Box.

The wealth manager cited the S&P 500 index's close above 1,920 on Wednesday as a particularly positive sign because it put the benchmark U.S. index at a price-to-earnings (P/E) multiple of about 16 times the next 12 months' earnings, which are forecast to be about $120. The S&P ended Wednesday up 8.53 points, or 0.44 percent, at 1929.80 after a sharp intraday reversal from 1 percent-plus losses.

"It gives us some confidence that we can get a fairly significant expansion [of valuations] by year-end, either by an increase in the P/E multiple as confidence comes back into the market with this bottoming in the oil price," Robinson said.

In U.S. trade on Wednesday, WTI recovered from a sharp overnight decline to settle up 28 cents, or 0.88 percent, at $32.15 a barrel.

The recovery was fueled by U.S. Department of Energy's weekly crude inventory data, which showed U.S. oil barrels rose by 3.5 million, about half what the American Petroleum Institute reported late Tuesday, suggesting a respite from continued oversupply.

U.S. crude oil futures had declined Tuesday after Saudi Oil Minister Ali al-Naimi said production cuts would not happen, although producers planned to meet in March to negotiate an output freeze.

But RBC Wealth, which has around 777 billion Canadian dollars ($566.53 billion) under management, cautions that there won't be a huge rally in stocks.

"I don't think we'll get a 50 percent breakout, let me be clear about that," Robinson said. "But I think [a rise to] an 18 P/E is not unreasonable."

The investor is particularly bullish on the outlook for one beaten down sector: U.S. banks.

The S&P 500 Financial Sector index is down 12.5 percent so far this year, as shares in the sector sold off on fading expectations for further Federal Reserve interest rate hikes and worries grow about banks' exposure to the hard-hit oil and gas sector.

But Robinson expects that lower rates for longer could benefit U.S. banks by increasing their net interest margins, which is the difference between banks' interest income from loans and the interest they have to pay for funds, such as deposits.

"This will lead to a little bit more inflation further down the line," he said. "We think lower rates for longer, plus the increased threat of higher inflation because of that, will steepen the yield curve and improve net interest margins."

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—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1