Lowering Our Targets

(1) Powell did say what he reportedly said on Oct. 3. (2) It was a big mistake, since he contradicted 9/26 FOMC statement and suggested Fed had a ways to go in raising rates. (3) Powell gets the most blame for having triggered October stock market rout, in our book. (4) Year-over-year comps for real GDP, revenues, and earnings will be lower in 2019. (5) Good earnings, bad guidance. (6) Analysts’ optimistic outlook for earnings doesn’t add up given likely slower growth of revenues and prospect of flat profits margin. (7) Lowering our outlook for earnings growth for the next two years. (8) Now shooting for S&P 500 at 2900 by year-end, 3100 next year, and 3500 in 2020. (9) Escalating trade war with China worsening the correction.