Tags: BlackRock | Leavy | stocks | bank

BlackRock’s Leavy: ‘Equities Have Further to Go’ in Long Term

Thursday, 21 Mar 2013 08:00 AM

By Dan Weil

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Chris Leavy, BlackRock’s chief investment officer of U.S. fundamental equity, says stocks may slip a bit from their record highs, but the uptrend isn’t over.

"In the short term, some kind of modest pullback would be perfectly natural and normal to see," he tells CNBC. "Longer term, though, we still think equities have further to go."

The Dow Jones Industrial Average closed at 14,511 Wednesday, down just 0.2 percent from its March 15 all-time peak of 14,539.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

Valuations are cheap, Leavy says. "You're only at 13 times next year's earnings," he notes.

"That's just not a demanding valuation. And when you factor in all of the share repurchase activity that keeps a bid on this market, combined with some of the positive flows we've seen, we think that any corrections along the way will be reasonably modest, and that you'll end the year higher."

Bank stocks are among BlackRock’s favorites — particularly Bank of America and U.S. Bancorp because they will benefit when interest rates finally move higher, Leavy says.

The idea is banks will become more profitable lending at higher rates. "There's just not a lot of ideas out there that truly benefit from higher rates and a steepening yield curve, and these stocks will benefit from that," Leavy says.

One expert who’s now bullish on stocks after two years of bearishness is Morgan Stanley strategist Adam Parker.

He predicts the Standard & Poor’s 500 Index will end the year at 1,600, up 3.4 percent from Tuesday’s close of 1,548.

“Given our economics team's view of improving U.S. growth and ample liquidity still being provided by the Fed, it is hard to see what causes a major market correction," Parker writes in a commentary obtained by The Wall Street Journal.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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