Latest news with #BinkyChadha
Yahoo
6 days ago
- Business
- Yahoo
Why These Market Forecasters Expect Stocks To End the Year at Record Highs
Deutsche Bank analysts led by Chief US Equity & Global Strategist Binky Chadha on Tuesday raised their year-end S&P 500 target to 6,550. That suggests about 10% upside from Tuesday's close. And it would be nearly 7% above the index's record close from earlier this year. Investor positioning, they said, is close to neutral and assumes tariffs will be a slight drag on earnings growth this Wall Street forecasters see stocks closing out 2025 at record highs—despite a shaky start to the year. Deutsche Bank analysts led by Chief US Equity & Global Strategist Binky Chadha on Tuesday raised their year-end S&P 500 target to 6,550, a number suggesting about 10% upside from Tuesday's close. That would be nearly 7% above the index's record close from earlier this year. Investor positioning, they said, is close to neutral and assumes tariffs will be a slight drag on earnings growth this year. 'However, if there is confidence that tariff impacts will be modest and temporary, we expect discretionary investors to look through any slowing in growth and turn overweight in anticipation of a rebound,' they wrote. The analysts expect robust corporate demand to shrink the supply of stock on public markets. They forecast companies will spend $1.1 trillion on stock buybacks this year, thanks to resilient earnings. Deutsche Bank raised its estimate of the S&P 500's aggregate full-year earnings per share to $267 from $240. The firm entered the year forecasting index-level earnings of $282 per share. But it slashed that outlook in mid-April shortly after President Trump paused 'Liberation Day' tariffs for 90 days and lifted rates on Chinese goods to 145% at a minimum. Earnings, they estimated, would suffer from a prohibitively high effective tariff rate and the lingering possibility of a prolonged trade war. The outlook improved last month when the U.S. and China agreed to slash their respective tariff rates while officials negotiated a more comprehensive trade deal. Tensions between the world's two largest economies linger: This weekend each party accusing the other of violating their tentative agreement. Still, the White House's approach to tariff negotiations has some market watchers feeling optimistic. Deutsche Bank's analysts take the White House's decision to pause 'Liberation Day' tariffs just hours after they took effect, 'before the emergence of any legal barriers or economic or political pain,' as a sign that 'if negative impacts of tariffs do materialize, we will get further relents.' As such, Deutsche Bank expects this year's rally to 6,550 to benefit investors who bet on Trump relenting. 'Despite the rhetoric to the contrary, the 2018-2019 dynamic of repeated cycles of escalation and de-escalation predicated on the market looks to be alive and well.' Read the original article on Investopedia
Forbes
6 days ago
- Business
- Forbes
What Is ‘TACO' Trade? Deutsche Bank Raises S&P 500 Target On Trump's Tariff ‘Relents'
Strategists at Deutsche Bank upped their forecasts for the leading U.S. stock benchmark this week as their optimism largely came from the idea of Trump backing down from his biggest tariff threats, a notion gaining steam on Wall Street and in Washington, earning Trump an unfortunate nickname. The White House has dismissed the TACO nickname as 'asinine' and 'nasty,' but Wall Street is ... More starting to discount the impact of tariffs. The Deutsche Bank strategists led by Binky Chadha upped their year-end price target for the S&P 500 index to 6,550, indicating they believe the S&P can jump 10% this year to a new all-time high. The upgrade was largely tied to the idea the White House has 'already relented' on tariffs and there will be 'further relents' on additional 'economic or political pains,' hinting the trade policies weighing heavily on corporate earnings are likely to get even lighter. Trade 'escalations drive pullbacks, followed by relents which then spark rallies again,' explained Chadha, nodding to the stock market whipsaws surrounding Trump's volatile trade rhetoric. The Deutsche Bank group rationale for stock gains reflects a growing consensus on Wall Street to not take Trump at face value on tariffs considering he has repeatedly backed down from his harshest trade posturing. That has led to the diffusion of the 'TACO' tenet for investors, short for 'Trump always backs down.' As Sevens Report founder Tom Essaye explains, the 'trade is based on the idea that Trump makes an outlandish and significant tariff proposal on a major U.S. trading partner but within a matter of days, backtracks and either delays the implementation or exempts enough goods that the tariff itself loses much of its bite.' Trump has 'always chicken[ed] out so far,' noted Essaye. Financial Times columnist Robert Armstrong is credited with coining the 'TACO' term. Trump lashed out last week at a reporter for asking a 'nasty question' surrounding the 'TACO' trade and White House spokesperson Kush Desai slammed the term as an 'asinine meme' in a statement to The Washington Post, but the term has gained popularity among Trump critics. On Tuesday, the Democratic National Committee parked a taco truck outside the Republican National Committee's Washington office adorned with a poster of Trump in a chicken suit, according to Axios. 'We have the lamest opposition in American history,' clapped back Vice President JD Vance. 'The past few months have been a constant tug of war between the Trump administration and foreign investors – or, as he likes to call them, 'The Globalists'…. The Globalists have won this first round and are now showboating by calling the roaring market comeback the TACO trade,' Juan Manuel Correa, BCA Research's chief strategist, global asset allocation, wrote in a Monday note. 20%. That's how much the S&P is up since April 8, when it closed at a 12-month low before Trump announced a pause on his most severe country-by-country tariffs announced the week prior. The index is still down 1% since Election Day.
Yahoo
7 days ago
- Business
- Yahoo
Deutsche Bank lifts S&P 500 year-end target amid Wall Street upgrade wave
(Reuters) - Deutsche Bank has raised its year-end target for the S&P 500 to 6,550 from 6,150, citing lower tariff-related earnings drag and a resilient economy, in a move that comes amid a broader wave of target upgrades by major Wall Street brokerages. This follows similar moves by Goldman Sachs and UBS Global Wealth Management, which raised their forecasts in May, with RBC Capital Markets joining the trend on Monday. "We now see the tariff drag at only about one-third of what we previously penciled in," Deutsche Bank strategists led by Binky Chadha wrote in a note on Monday. The new target is 10.35% above the S&P 500 index's last close of 5,935.94. The S&P 500 posted its strongest monthly gain since November 2023 in May, boosted by U.S. President Donald Trump's softer stance on tariffs, strong corporate earnings, and tame inflation data that helped markets recover from April's decline. Still, the European brokerage warned that the rally could be volatile, with potential pullbacks driven by renewed trade tensions. "We expect the rally to be punctuated by sharp pullbacks on repeated cycles of escalation and de-escalation on trade policy", the brokerage said. Deutsche also increased the estimate for the index's earnings per share to $267 from $240.
Bloomberg
01-05-2025
- Business
- Bloomberg
Bloomberg Surveillance TV: May 1, 2025
- Binky Chadha, Chief US Equity & Global Strategist at Deutsche Bank - Brian Gardner, Chief Washington Policy Strategist at Stifel - Dan Ives, Global Head: Technology at Wedbush Securities - Ian Lyngen, Head: US Rates Strategy at BMO Capital Markets Binky Chadha, Chief US Equity & Global Strategist at Deutsche Bank, discusses his most recent S&P 500 target and his outlook for US equities amid continued uncertainty over US tariffs. Brian Gardner, Chief Washington Policy Strategist at Stifel, talks about the Trump admin's economic policies and flexibility in pivoting and adjusting its approach to tariffs. Dan Ives, Global Head: Technology at Wedbush Securities, discusses Big Tech earnings, previews Apple, and talks Tesla leadership. Ian Lyngen, Head: US Rates Strategy at BMO Capital Markets, talks about the outlook for the 10-year yield and whether Treasuries are set to fall.
Yahoo
25-04-2025
- Business
- Yahoo
'An $800 billion tax increase': Tariffs have derailed the S&P 500 forecast of one of Wall Street's top bulls
Deutsche Bank dialed back its expectation for the S&P 500 this year. Analysts at the bank warn that tariffs will slash US corporate earnings. A trade policy pivot is necessary to trigger a durable rally. Deutsche Bank has slashed its ultra-bullish outlook as it assesses the potential damage to corporate earnings as a result of tariff policy. Analysts now expect the S&P 500 to reach 6,150 by the end of the year. While that still suggests 12% upside from the benchmark index's levels, it's a considerable downgrade from Deutsche's previous target of 7,000. Aggressive tariff hikes will hit American firms disproportionately, amounting to an "$800 billion tax increase," the bank said. It arrived at that figure by applying the new effective US tariff rate of roughly 25% on $3.25 trillion of total goods imported to the country last year. "US corporates intermediate most goods imports, whether for consumption or as components for further processing, and we see them bearing the bulk of the tariff hit with few avenues for relief," a team led by chief strategist Binky Chadha wrote on Wednesday. In other words, tariffs will eat into corporate profits, and Deutsche now projects S&P 500 earnings-per-share to reach $240 this year. "This is -15% below our prior forecast and implies a -5% decline from 2024 earnings," Chadha and his team said. "The bottom-up analyst consensus is currently at $269 and at risk of continuing downgrades." All told, that's not a good omen for stocks. Since earnings growth is the fuel for S&P 500 gains, the bank expects it will keep trading in a range between 4,600 and 5,600. Positive news on tariffs should help trigger sharp upside, Chadha wrote, but there's no sure-fire signal that trade tensions are yet easing. Chadha suggested that a slump in presidential approval ratings could be the key to unwinding tariff policy, but that has yet to happen. A durable rally will occur if there's a credible positive development on trade, which could happen once President Donald Trump's rating hits the low-40s to 30s. "The longer it takes to get a policy relent, the higher the chances of non-linearities kicking in, which are then harder to unwind, invoking the risk of prolonged downturns such as in 2008, 2000 and 1973," his team added. Deutsche is also gearing up for a large tax package to be approved this year, alongside an extension to Trump's 2017 tax cuts. Though this could deliver a short-lived rally, the benefits from fiscal policy won't be enough to overcome the hit from tariffs. Read the original article on Business Insider Sign in to access your portfolio
