The Dow 30,000 happening sometime within the next 12 months may not be as insane as it initially sounds.
Even though you can’’t blame one for choking on their fifth Red Bull at the sound of Dow 30,000 looming large. U.S. trade tensions with China (and Europe, too) continue to run hot. President Donald Trump continues to trash Federal Reserve Chair Jerome Powell seemingly daily on Twitter. And the entire scope of that rhetoric is making it quite hard for Corporate America to invest in growth initiatives.
Nevertheless, here we are — the Dow Jones Industrial Average (^DJI) is within spitting distance of its fall 2018 record highs. At 26,501 on Wednesday, the blue-chip index is only 13.2% away from a large round number the bulls would love to see (they love round numbers).
There is at least a 25% probability of Dow 30,000 occurring by the first quarter of 2020, Skybridge Co-Chief Investment Officer Troy Gayeski said on Yahoo Finance’s The First Trade. That call is in large part due to the low interest rate backdrop and a healthy Corporate America pushing investors more into stocks for fear of missing out on gains.
Investors certainly have the cash to pile into stocks. Fund managers’ are now aggressively overweight cash, according to a new survey from Bank of America Merrill Lynch.
To be fair, Gayeski then sees the chance of a U.S. recession by the third quarter of 2020. That would suggest that the Dow 30,000 could mark a short-term peak.
Others on Wall Street agree with Gayeski’s medium-term bullish assessment.
“I think we can make new highs. The window could be when corporations report second quarter earnings in July and August and give third quarter outlooks, if there is a little bit of promise on the trade front that allows businesses to plan and spend I think we can have a good runway going into the end of the year and into 2020,” contends 50-plus year market veteran Jim Awad of Clearstead Advisors.
“We can make a new high in the markets somewhere between July 30 and the end of the year if there are no surprise events or wounds,” Awad adds.