Most strategists are moderately bullish on the U.S. stock market for this year. But you can wipe off the “moderately” for Brian Wesbury, chief economist of First Trust Advisors.
“I’m looking for 3 percent growth in GDP – it could be even stronger than that – and 20 percent growth in stock prices” for 2012, Wesbury tells Yahoo.
And why is he so optimistic? “Mainly because the economy is going to be stronger than people think, earnings are at an all-time high, and they will grow again in 2012,” Wesbury says.
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He sees two factors driving profits higher. One is the increase in productivity provided by the growth of cloud computing and mobile devices, such as smart phones and tablet computers.
“It’s the equivalent of the technology boom we saw in the early 1990s with personal computers and windows software,” Wesbury says.
“Now we’re yanking computers off our desk and putting them in our palms. That productivity drives profit faster than GDP growth.”
The Federal Reserve’s accommodative monetary policy, while causing inflation in the long term, also will boost profits this year, Wesbury says.
At the other end of the spectrum on stocks sits Adam Parker, chief equity strategist at Morgan Stanley. He thinks the Standard & Poor’s 500 Index will drop 7 percent this year.
Bulls like Wesbury are "too optimistic about earnings," Parker tells The Wall Street Journal.
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