CNBC's Trillion Dollar Survey of top money managers and investment strategists finds expectations the stock market will continue to rally this year, the next interest rate move by the Federal Reserve will be a rate cut, and Democrats will capture the White House in 2008.
The nationwide survey of more than 60 strategists, money managers and investment advisers asked their opinions on topics including stocks, commodities, the credit markets, interest rates, the economy and the presidential election.
Among some of the results:
Stock Market: 80% of those surveyed see the Dow around 14,000 or higher at the end of the year. 72% see the S&P 500 around 1550 or higher at year end. In terms of geographic investment opportunities in 2007 - those surveyed are most bullish on the US market for 2007 - the US & Japan in 2008. Liquidity is the strongest factor influencing the stock market right now. Rising interest rates and Congress (Taxes, other legislation) are viewed as the two biggest threats to the stock market's rally.
Sector Strategy:Those surveyed are most bullish on the Energy & IT sectors for the balance of 2007 while IT is the clear choice for 2008. They are most bearish on Consumer Discretionary and Financials for the rest of 2007 and on Consumer Discretionary and Utilities for 2008.
Other Markets: Those surveyed are split evenly on the Dollar versus the Yen or Euro with a slight bias towards more weakening for the dollar. 85% see Gold around $650 or higher at year end - 49% see Gold around $700 or higher. 53% see Crude Oil around $65 or lower at year end. 75% see 10 Year Treasury Note Yield between 5 & 5.5%.
Fed/Econ: 79% say the Fed's next move will be to cut interest rates, but 72% say the Fed won't make a move in 2007. 90% see U.S. GDP growth holding between 1-3% for balance of year.
Politics: 72% think Hillary Clinton will win Democratic Presidential nomination. Yet, Clinton is tied with Bill Richardson with 27% each, as the Democrat those responding would want to see win the nomination. 51% think Rudy Giuliani will win Republican Presidential nomination, 47% making him the candidate they want to see win as well. 75% think the Democrats will capture the White House in 2008 - but 64% want the GOP to win.
Private Equity: 73% said that the private equity cycle has not peaked. 83% believe growing populist and protectionist sentiment in Washington threatens the stock market rally. Despite that, 65% are for taxing private equity partnerships that go public at a corporate rate ("Blackstone Bill"). But a smaller portion, 52% of respondents believe fund managers "carried interest" should be taxed as ordinary income.