Leuthold’s Jim Paulsen says the S&P 500 will hit 5,000 in the next 12 months

At a time when virtually all of Wall Street is wary of a recession, Jim Paulsen of the Leuthold Group says stocks will rise at least 25% next year.

Chief investment strategist at Leuthold predicts the S&P 500 will hit 5,000 points in the next 12 months, a much more optimistic forecast than any forecast by strategists Bloomberg regularly surveys. Paulsen said in an interview on Bloomberg Television on Thursday that investors are focusing too much on the Federal Reserve and the impact of rate hikes.

“The lows have formed and I think we are starting a new bull market,” Paulsen said in an interview on Bloomberg TV on Thursday. “The Fed is not the only policy driver in the room. There are others and a lot of them have begun to ease off.

The 10-year Treasury yield is hovering around three-month lows, while the US dollar has fallen nearly 9% from peak to trough and mortgage interest rate fell for the fourth week in a row, the longest losing streak since May 2019.

Although the Fed is expected to raise rates by another 50 basis points to curb inflation, the economy is slowing and “they’ll have to get it done soon,” Paulsen said.

The average equity strategist is predicting a refuse for the S&P 500 in 2023 as recently wage and service The data shows that inflationary forces are still holding back the economy, boosting the chances of higher interest rates.

Wall Street watchers are sounding the alarm ahead of next week’s Fed policy meeting, warning that the outlook for the US economy in 2023 is bleak. Top bank CEO from Goldman book David Solomon of Group Inc. JPMorgan Chase & Co. Jamie Dimon recently shared their dire predictions of a possible recession.

“I never remember a time when the CEOs in this country were almost 100 per cent commonplace that we were going to have a recession,” Paulsen said. “Typically, a recession is something that happens out of the left sector and takes the market by surprise. That will not happen here.”

Still, Paulsen said he thinks the US can still avoid a recession.

“There is too much pessimism,” he said. “Too many things have been discounted and that opens the door for a positive surprise and everyone has to catch up.”

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