By Sam Boughedda
Dan Niles, the Founder and Senior Portfolio Manager for the Satori Fund, told Investing.com and Street Insider on Monday that he expects to see the S&P 500 at 3,000 "before this is over."
In a Twitter Spaces, Niles said the 3,000 target is for mid-year as he believes inflation will keep coming down but remain "sticky" due to the China re-opening, while U.S. consumers are running out of excess savings, and the Federal Reserve is not cutting and will get rates closer to 6%.
The market has been on "heavy drugs" in the last 13 years due to excess stimulus from central banks, claimed Niles, but it is now going through withdrawals.
He believes that the China re-opening will result in commodity prices remaining elevated due to the increased demand, while services inflation will be an ongoing problem.
As a result, the Satori Fund founder sees the Fed raising interest rates closer to 6%, adding that he doesn't see a rate cut this year.
Based on higher inflation, Niles expects EPS forecasts to come down to about $200 on higher inflation and slower growth from a 252 peak. Assigning a 15x trailing PE equals 3,000 in the S&P 500, Niles explains.
Despite the target and his view that all stocks are likely to drop further if the S&P 500 declines to 3,000 in a recession, Niles revealed that his firm feels "travel & leisure will outperform our shorts in the COVID beneficiaries & therefore generate net profits in the portfolio."
He also pointed to a boost in the travel sector due to China re-opening and said his firm owns United Airlines Holdings Inc (NASDAQ:UAL) and Expedia (NASDAQ:EXPE).