“Stay bullish,” that was the message from JPMorgan’s Mislav Matejka on Tuesday. “Positive catalysts are not exhausted.”
Markets seemed to agree. European shares reclaimed record highs (figure below) a day on from a solid start to 2022 on Wall Street powered (no pun intended) by Tesla.
If you ask JPMorgan, sundry risks are already in the price. Or else they won’t pan out in a way that’s likely to derail equities.
In a short note out Tuesday, SocGen described “a quiet, confident, hungry bull” in Europe. That’s a bit hard to picture in real life, but one imagines it’s infinitely preferable to a loud, self-conscious, engorged bear.
“This bull market is not over,” the bank’s Roland Kaloyan went on to declare, noting that SocGen’s target for the Stoxx 600 is 520, suggesting at least 6% of additional upside.
“We expect this increase to be driven mainly by solid earnings growth in a supportive macro environment,” Kaloyan said, adding that in the bank’s view, “the European cycle still has legs.” And besides, European shares trade a record discount to their top-heavy US counterparts (figure below).
Speaking of top-heavy US stocks, JonesTrading’s Mike O’Rourke described the early price action stateside as a “mega-cap mania.”
When it comes to Tesla, “good news becomes great news by default, and great news becomes extraordinary,” O’Rourke wrote, in his first note of 2022.
Then, he offered some context. “The company added $143 Billion in market capitalization [Monday] more than the entire value of a Citigroup or Goldman Sachs or Raytheon in a single day,” he mused. “Tesla added more than 1.6x the entire value of General Motors [which] delivers approximately 7 million vehicles a year.”
Elon Musk gained $34 billion on paper Monday (figure above), the largest single-day increase since the Hertz deal.
Meanwhile, Credit Suisse’s Jonathan Golub reiterated his bullish view for US equities. The S&P will hit 5,200 by the end of 2022, Golub reckons. EPS growth will be nearly 12% this year and 8.5% next.
For what it’s worth, SocGen added a perfunctory caveat. “But a year in equity markets is never a walk in the park,” Kaloyan remarked. “Some events could trigger volatility [including] new COVID-19 waves, a Chinese slowdown, French elections and the first Fed rate hike in four years.”
