Brian Jacobsen is chief portfolio strategist at Wells Fargo Funds Management. In addition to his role at Wells Fargo conducting research and giving presentations on the markets and the economy, he is an associate professor at Wisconsin Lutheran College. Jacobsen’s research and teaching center on economics, finance and investing. ETF.com recently caught up with him to get his thoughts on the economy and financial markets.
ETF.com: The last time we talked was back in October, when you told me the S&P 500 was going to hit 2,400. That was before the election, and the S&P 500 was trading around 2,150. We hit your target just a few weeks ago. Were you surprised how fast it happened, and what’s your new target for the index?
Brian Jacobsen: I wasn't surprised, because I thought that if markets got a little bit of clarity and a little bit of juice from the prospects of tax reform, that we could see a marked move higher.
The market moved so abruptly because you had the convergence of three forces. One was that global economic data had been improving since late summer/early fall, and so we had the economic momentum on our side.
Then I also thought that central banks would stay accommodative. Even though the Fed has removed some of that accommodation, it’s been very gradual in doing so. And then the third was that I figured whoever ended up winning the election would bring forward some reforms that would be favorable to the corporate bottom line.
With those three forces coming together, I thought we were poised for a marked move higher. It happened very quickly. We got to 2,400 and got a little bit of a setback. I would not be surprised if we get to 2,450 in the near term and then see a retracement that rekindles the bears' enthusiasm, because they always have to come out in order for us to make another move higher.
I also wouldn’t be surprised if some time this year we get to 2,650 on the S&P 500.