Why Dan Loeb Is Bullish on the US Stock Market
Dan Loeb’s recent interview with CNBC
On Friday, October 20, 2017, in an interview with CNBC, Dan Loeb, the chief executive officer of Third Point, shared his views on the bull market (SPY) (QQQ), the S&P 500 Index, and his various stock picks.
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Dan Loeb is bullish
The prominent hedge fund manager has beaten the returns of the S&P 500 Index (SPY) over the last two decades. He has a bullish view on the US stock market and believes that the bull market will continue. He wrote in an investor letter, “we believe the US has room to lead versus the rest of the world from here and while we have increased exposure to Europe overall this year…the majority of our portfolio remains in US equities.”
He said solid GDP growth, potential tax reform, and strong S&P 500 earnings are the main factors that support his view on the US stock market (IWM) (IVV). We discussed in a previous series that the increasing hopes for the passage of a tax reform bill are leading to new highs on the S&P 500 Index (VOO). Tax reform could lead to significant expansion in US economic activity and boost employment.
On the other hand, the S&P 500 already posted strong earnings growth in both 1Q17 and 2Q17. The expectation for solid improvement in earnings for the rest of 2017 and 2018 is making investors more bullish on the index. Dan Loeb estimates that the S&P 500 Index will rise 12% in 2018. The index has rallied nearly 14.7% on a year-to-date basis as of October 24, 2017.
In the next part of this series, we’ll analyze Dan Loeb’s view on US economic growth and the market.