He may see stocks soaring around 12 percent this year, but Art Hogan isn’t overlooking near-term risks that could lead to another stock market downdraft.
The B. Riley FBR chief market strategist cites jitters over 10-Year Treasury note yields ticking passed 3 percent and potential Washington policy errors.
He believes Wall Street is too “hyper-focused” on yields right now. He doesn’t see it emerging as a detriment to the market unless it makes a run to the 3.50 percent level.
The trade war risk is what Hogan is taking more seriously.
“A trade policy mistake is probably the biggest fear we have in the marketplace right now, and rightfully so,” he said Monday on CNBC’s “Trading Nation.” “We have a lot of momentum in front of us, and the only impediment has been a fear of a mistake — either a monetary policy mistake or a trade policy mistake.”
But Hogan still sees stocks going back in rally mode this year. The risks aren’t overshadowing his assertion that fundamentals are wildly solid.
“I think that fundamental story continues to be very strong,” Hogan said, adding the next 12 months look “pretty fantastic.”
His thoughts came as the S&P 500 was bouncing around the flatline for the year. As on Monday, it was still 7 percent below its intraday all-time high of 2,872 from Jan. 26.
“We ignore the fact that we’re going through an earnings reporting season where we’re going to have close to 20 percent growth in the S&P 500 on 9 percent revenue growth,” he said.
Hogan, who has a S&P 500 year-end target of 3,000 (about 10 percent upside from current levels), favors cyclical names right now such as industrials, technology, financials and energy.
“We’ve got a strong economy and a strong earnings cycle. I think we’re still in early days here,” Hogan said.
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