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‘We’re starting a new bull market’: S&P 500 to hit 5,000 in next 12 months, predicts Leuthold’s Jim Paulsen

Leuthold’s chief investment strategist expects the S&P 500 to hit the 5,000 mark in the next 12 months, a far more bullish forecast than any provided by strategists Bloomberg regularly reviews. Investors are focusing too much on the Federal Reserve and the implications of its interest rate hikes, Paulsen said in an interview with Bloomberg Television on Thursday, adding that the economy is slowing.

“The lows are and I think we are starting a new bull market,” Paulsen said in an interview with Bloomberg Television on Thursday. “The Fed is not the only political engine in the room. There are others, and many of them have already started to ease.”

The 10-year Treasury yield is hovering around a three-month low, while the US dollar is down nearly 9% peak-to-trough and mortgage rates it fell for the fourth straight week, the longest period of declines since May 2019.

While the Fed is expected to hike rates another 50 basis points to curb inflation, the economy is slowing and Paulsen said they “have to wrap up very soon.”

The average equity strategist expects a decline for the S&P 500 in 2023 as recent wage And Services data suggests that inflationary forces are still gripping the economy, raising the chances of higher rates.

Wall Street watchers are sounding the alarm ahead of next week’s Fed policy meeting, warning that the outlook for the US economy in 2023 is bleak. The best CEOs of banks from Goldman Sachs David Solomon of Group Inc. a JPMorgan Chase & Co. Jamie Dimon recently shared their dire predictions of a possible recession.

“I never remember a time where CEOs in this country are nearly 100 percent universal that we’re going to have a recession,” Paulsen said. “Usually, recessions are something that comes out of left field and surprises the market. It won’t happen here.”

However, Paulsen said he believes the US can still avoid a recession.

“There’s too much pessimism,” he said. “Too much has already been discounted and that opens the door for a positive surprise and people need to catch up.”