Bear turned bull, Morgan Stanley's Adam Parker is calling for the S&P 500 (SPY +0.9%) to hit 1,840 over the next 12 months, but that 11.2% gain is just his base case. Parker's bull scenario has the S&P gaining 40% to 2,327.
Behind the turn: A series of fresh records for market averages hasn't boosted CEO confidence - capital spending remains low, deal activity is tame, hiring meek, and inventory builds are small.
Parker's also not concerned about the taper and believes bond yield gains have about topped out. "The government doesn’t want to slow the economic recovery, demand for income is enormous and the CEOs are [incentivized] to grow their dividends."
"We are buyers of dips and maintain our constructive stance, even though markets appreciated more than we expected year-to-date."
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