Never mind the torpedoes, it's full steam ahead for stocks. That's more or less the message from Phil Dow, director of equity strategy at RBC Wealth Management.
To begin with, Dow sees an end to the much-discussed rally in crude oil, which has jumped around 25% in roughly two months. "Prices will moderate somewhat over the next couple of years," says Dow, who has a $95 to $97 a barrel target for 2011 and only slightly higher than that for next year, projecting prices of $102 to $105.
"[That's] still a very robust profit environment for people that can successfully find oil and gas, but one that shouldn't damage the consumer too much," he tells me in the accompanying video.
I pressed Dow on it, since oil continues to head upward. Dow says his view is that crude "could go higher by and large," but that his forecasts are based on supply and demand, rather than speculative moves that would be driven by traders.
As for stocks, Dow sees "a pretty stable profit picture." That would be news to the bears, who are expecting profits to continue to slow, from over 30% last year to 15% this year. Dow, who isn't tremendously concerned about ratings downgrades for U.S. debt, thinks 1,380 is more than doable this year for the S&P 500 and is, in fact, probably conservative.
The Minnesotan market seer says companies like Halliburton (HAL), along with cloud computing and mobile companies, will continue to gain traction versus the rest of the tape.
As for consumer discretionary? Sorry, not even an optimist like Dow can regard consumers' cups as half full. The sector is a trading play in the best of times -- and not even the sanguine Dow thinks the consumer is going to be rocking in the foreseeable future.
Disclosure: Macke is long USO.