2017 Consensus Themes

As we begin 2017 the following themes have emerged as the consensus of expectations for most of Wall Street for the coming 12 months.    If history is any guide, we know there will certainly be surprises to “consensus” expectations and our contrarian nature makes us even more skeptical that what “everyone” is expecting to happen actually will.   Anyways, here is what he have gleaned from the talking heads and Wall Street analysts for what they expect going forward:

1. US domestic earnings growth will pick up significantly in 2017.  With the notable exception of Goldman Sachs most analysts predict the earnings of the S&P 500 will grow from around $118 this year to anywhere from 4-14% with most clustering around a 10% earnings growth.  2016 earnings by comparison will be basically flat compared to 2015.
2. US Equity Markets will continue to ride the Trump rally and his pro-growth initiatives to all time highs in 2017.  The S&P closed 2016 at 2240.  Its hard to find an analyst that isn’t predicting the market to continue to go higher in 2017.  Of course, that isn’t much of a surprise.  At the bottom we include the predictions for 2008.
3. The Bond rally is over and bond prices will be under pressure this year as interest rates rise.  The 10 Year US Treasury rate was 2.45 at the close of 2016.
4. The US Dollar will continue its upward trend as the US offers the best place to invest because of growth and higher interest rates compared to the rest of the world.  After hitting a low back in May of last year the dollar finished 2016 strong gaining over 10% off the lows.  Most commentary we come across thinks this will continue
5. Financial Stocks, which have rallied sharply since the US Presidential election will continue to lead the way in 2017.
For reference here were some predictions for 2008.  Keep in mind the S&P closed 2008 at 865!