$6.6 billion money manager calls stocks 'cheap,' predicts they'll surge to new highs this year

Bill Stone never wavered from his bullish case during the market meltdown.

And now, the Avalon Advisors chief investment officer is calling for a banner year for stocks.

"There's no doubt stocks are cheap relative to bond side of the equation," he said Wednesday on CNBC's "Trading Nation." "You could have a good market."

Stone, who manages $6.6 billion, sees the S&P 500 surging more than 13 percent from current levels to at least 3,000 by year-end. The S&P all-time high is 2,940, hit on Sept. 21.

What could get the markets there? Stone said not much — just "decent news on the economy."

He acknowledges the risks that helped spark the late 2018 correction haven't entirely disappeared. There are still jitters surrounding the global slowdown, the U.S.-China trade war and Brexit. Plus, Wall Street is now trying to calculate the impact of the historic government shutdown.

However, Stone contends one major source of worry for Wall Street has mostly subsided: a Federal Reserve that was planning to raise interest rates several times in 2019.

"Part of the problem was the worry that the Fed was going to have a policy error, and throw us into recession. That has really receded," said Stone. "The markets are assuming maybe no hikes."

As a result, Stone predicts the most beaten-up groups from the correction could see a solid rebound in the coming months.

He likes financials, semiconductors, technology and consumer discretionary stocks.

"We still like the consumer," Stone said. "We think wages will continue to go up, and we'll have some good job growth."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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