Pro Analysis

Trump rally to continue into year end, but then strong dollar becomes risk: Deutsche Bank

Donald Trump
Mike Segar | Reuters
Donald Trump

Deutsche Bank strategist David Bianco told investors the market will go up into January on optimism over President-elect Donald Trump's economic agenda, however the rest of 2017 may be more choppy as a stronger dollar weighs on oil and asset prices.

"We believe Rep [Republican] led policies of less regulation and tax cuts will help accelerate growth, further tighten the labor market, and accelerate S&P EPS growth, particularly when corp tax cuts take effect," Bianco wrote in a note to clients Friday.

"We think energy and most industrials are overvalued, and we prefer Health Care, big banks, capital markets, reasonable PE Tech. We expect these groups to lead the S&P to 2200 soon, but fear Energy might repeat its early 2016 dive."

He raised his 2016 year-end target for the S&P 500 to 2,200 from 2,150, representing 2 percent upside from Friday's close. Bianco reiterated his 2017 year-end target of 2,350.