Market Rallies As Economy Beats Lowered Expectations
James Paulsen, chief investment strategist at Wells Capital Management, told CNBC’s “Closing Bell” that the economy beat lowered expectations, igniting Monday’s market rally.
“In the last 45 days, initiated by the Feb. 26 plunge, expectations have really been brought down,” Paulsen said Monday. “We’ve brought expectations on the economy down to 1% to 2% real GDP growth, and earnings down to 3%. What we’re seeing here in the last week or so is beating low expectations. Jobs are better than we thought. We found out today that retail sales are better than we thought, and early earnings reports have come in stronger than anticipated. Combine that with lots of liquidity and still low interest rates and you get the rally you see here today and round the globe.”
Tony Dwyer, equity market strategist for FTN Midwest Securities, said he believes the next major market move will be about 15% to the upside.
“In our view, the macro economic backdrop is tremendous,” Dwyer said. “You have slower earnings growth. At this point in the cycle, it’s a positive because it means weaker growth, stabilization in interest rates at a lower level, and you get a multiple expansion. That’s were you get the bulk of upside in a broad equity market –- when you have a slower economy, a mid-cycle environment and you have a multiple expansion.”