Citigroup’s top market watcher isn’t letting geopolitical jitters rattle his stock market forecast.
In an interview Tobias Levkovich said it’s too premature to make investment decisions on whether a trade war will erupt over Trump tariffs, or if Italy’s political crisis will spark a contagion.
“That’s kind of geopolitical risks akin to what if there’s a war with Iran. So, we don’t predict those. If they occur, we have to react and we have to hedge portfolios,” the firm’s chief U.S. equity strategist said.
But by all accounts, Levkovich’s stock market forecast isn’t the rosiest. He’s predicting a choppy year.
“We’re actually trying to take advantage of some of the slowdown or the pullback,” he said.
He’s particularly interested in select industrials, financials and energy. The groups have been showing weakness after 10-Year Treasury yields backed off levels over 3 percent.
“We still think bond yields are heading higher. Wage inflation is coming,” said Levkovich. “By the next six months, we should see higher yields which then benefit financials.”
Levkovich’s S&P 500 year-end target is 2800, but his 2019 mid-year forecast isn’t much higher.
Levkovich acknowledged his forecast may be disappointing to investors who want a record-breaking, double-digit performance like last year, adding “We’re all greedy.”
Trader Georgi Bozhidarov