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Shares are climbing a ‘wall of fear’ too rapidly amid tax dangers, Oppenheimer’s John Stoltzfus says

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Oppenheimer Asset Administration’s John Stoltzfus is questioning the drive of the historic market rally.

Stoltzfus, who’s the agency’s chief funding strategist, warned shoppers in a analysis be aware this week that “These benchmark strikes had even long-term bulls like us questioning if the inventory markets are climbing the proverbial ‘wall of fear’ too quick for this early in a yr.”

On CNBC’s “Buying and selling Nation,” he cited tax dangers underneath President-elect Joe Biden as a significant piece of his concern.

“We nonetheless have sure issues which are unknowns in regards to the new administration coming in, significantly in the event that they take away the 2017, 2018 tax reform,” Stoltzfus mentioned Wednesday. “It [Wall Street] actually is not recognizing these dangers from what we will inform.”

Stoltzfus credit decrease taxes underneath the Trump administration as a key buffer throughout the coronavirus pandemic’s financial fallout.

“We do imagine tax reform helped companies navigate very troubled waters,” he mentioned.

Stoltzfus’ hunch is traders and merchants are extra targeted on extra near-term federal virus assist and Covid-19 vaccines versus tax threats proper now. He believes the market could also be genuinely anticipating one other spherical of huge stimulus to offset the lack of tax reform.

Regardless of his concern, Stoltzfus hasn’t modified his 2021 place on shares. He got here into the yr with a 4,300 year-end worth goal on the S&P 500, which displays a 14.5% improve from 2020’s shut.

“So so long as the vaccination course of is profitable, we have got a reopening forward,” Stoltzfus mentioned. “We advocate being uncovered to cyclicals and lightweight weight in direction of defensives at this level.”

On Wednesday, the S&P 500 gained a fraction of a p.c to shut at 3,809.84. The index is up 8.5% over the previous three months.



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