Meltup!

We are raising our yearend target for the S&P 500 to 5800 from 5400. We are still targeting 8000 by the end of the decade. The stock market seems to be discounting our Roaring 2020s scenario faster than we expected. We've been among the most bullish investment strategists since November 2022, but not bullish enough. The bull market might continue to achieve our targets ahead of schedule.

Since June, the stock market has been in a slow-motion meltup. Economic indicators have been weaker than expected raising the odds of Fed rate cuts. The federal funds rate futures market is now signaling four 25bps rate cuts over the next 12 months (chart). Fed Chair Jerome Powell's congressional testimony yesterday and today suggest that the Fed is likely to start cutting in September. Tomorrow's CPI could be a surprise to the downside, further fueling rate-cut euphoria and the stock market meltup.