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Dave Lutz of Stifel, Nicolaus was just on CNBC making the bull case for stocks.He sent out notes outlining his case.

We summarize:

  • The fiscal cliff will be resolved more favourably than expected. There are hints that some Republicans would be open to compromise on taxes, which if true would resolve a major stumbling block towards a deal
  • Earnings: Expectations are very low. Anything roughly “in line” would be bullish.
  • The financial stocks could be big winners in particular this earnings season. Wells Fargo could lead the way thanks to mortgage exposure.
  • There’s room for a big rotation of money back from fixed income into equity. Sentiment towards fixed income is still incredibly high, and it was a major tell that Vanguard (the big fund company) just announced more money in fixed income than in stocks. A major tell. Remember: “‘The market will do whatever harms the most participants.”
  • The end of the election will bring the end of some uncertainty.

There you have it. This is how we get to S&P 1600.

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