A noted Wall Street veteran has hiked his earnings forecast for 2017, citing a much more business friendly environment under the incoming administration of President-elect Donald Trump.
Even though the Dow Jones Industrial Average and S&P 500 Index have already jumped soared since the November 8th presidential election, economist Edward Yardeni argued that stocks are actually not overvalued. He said that notion is one of the biggest misconceptions in the market, and it could mean even bigger gains for the market.
"I now think that earnings instead of being up eight percent, it could be up closer to 20 percent. That's the kind of impact the substantial tax cuts could have," said Yardeni, president of Yardeni Research recently on CNBC's "Futures Now."
"It may not happen until the summer or fall. The question is: Will it be retroactive? I think it will be retroactive," he added.
The historical gains could just be beginning.
"As soon as Trump won, the markets started to rethink whether he was bullish or bearish, and very quickly concluded he was bullish because of his economic program. Not only that, he came in with a majority in both houses of Congress which increases the chances they'll get his tax cuts passed," said Yardeni.
"I think it's a good bet."