Credit Suisse’s Jonathan Golub is painting a more bullish picture for corporate America with earnings season officially underway.
“It’s going to get better and better as we progress throughout 2021 for their profits,” the firm’s chief U.S. equity strategist told CNBC’s “Trading Nation” recently.
JPMorgan Chase, Citigroup and Wells Fargo kicked off the season on Friday.
“In aggregate, they really crushed it,” Golub said. “You’re going to see the same thing, and you’re seeing that in all kinds of capital market activity and trading activity — things related to interest income, and the like.”
Overall, he believes Wall Street is too pessimistic on S&P 500 earnings growth this season. Refinitiv estimates it will fall by 10% in the fourth quarter. Meanwhile, Golub’s forecast reflects a 4% dip in growth, and he’s not ruling out a slight gain.
In a recent earnings outlook note, Golub wrote: “Unusually robust analyst revisions points to further upside to corporate profits. Separately, history indicates that strong ISM readings, like last week’s 60.7, is highly correlated with beats.”
On “Trading Nation” last month, Golub had a more nuanced view. He wanted to wait for more clarity on policy under the Biden administration before making a major call. But with the outcome of Georgia’s Senate run-offs finalized, he speculated a blue wave will provide additional coronavirus aid to the economy and help businesses.
In 2021′s first week, Golub increased his S&P 500 year-end forecast to 4,200 from 4,050, an 11.5% jump from Friday’s close. Not only did Golub reference the blue wave, but he also listed economic reopenings and pent-up demand for his bullishness.
Most underrated bullish story of the year?
According to Golub, the re-opening trade has become the most underrated market story of the year. He believes a breakthrough will come in the year’s second half when folks re-emerge from lockdowns vaccinated. He speculates delayed medical care, concerts and even shopping at a mall will be tops on their to-do lists.
“We’re going to see things really open up,” Golub said. “The economy could be cranking.”
