Wall Street's biggest bear could soon be running with the bulls.
Chris Harvey, Wells Fargo Securities' head of equity strategy who turned extremely negative on 2019 after last year's Christmas Eve crash, struck a more positive tone on Tuesday in an interview with CNBC's "Futures Now."
"We're starting to see a lot of things to be constructive about: central bankers globally becoming more dovish, interest rates coming down, credit spreads also tightening and a lot of liquidity in the marketplace. And good valuations," Harvey said, doubling down on his call earlier in March that his S&P 500 year-end price target of 2,665 might be too low. That's the lowest target among major Wall Street strategists.
"We did expect equities to go higher, and they did," he said. "They just [have] gone higher faster than we would've expected. The other thing is, ... when we made our price target, the Fed looked like it was going to raise rates consistently this year. They did a 180 at the beginning of the year and we've just been a little bit slow to react."
He added that the Trump administration's trade negotiations with China and rising expectations of a potential interest rate cut in 2019 are also driving his more positive outlook. He said new highs are "possible" if the trade issues get resolved and the Fed keeps rates low.
Now, with the Fed expected to maintain its cautious outlook on Wednesday afternoon following its two-day meeting, Harvey sees some downside risk.
"I think the biggest risk is expectations," Harvey said. "It's partly expectations, it's partly interest rates, and it's partly the Fed. [Fed Chair] Jay Powell has a history of doing and saying things that take the market off step. And so we'll see. We're not expecting much from Powell tomorrow, but, again, he has a history of saying things that put a little bit of volatility in the marketplace. And let's not forget: Trade and China isn't over just yet."
Still, that's not enough to curb Harvey's budding optimism.
"If we get trade and tariff[s] done, if the Fed says we're going to stop, and if the economy continues to move along at a reasonable pace, which it appears to be doing, I think equities can continue to move higher," he said.
S&P 500 futures were down slightly before Wednesday's opening bell but are up more than 13 percent year to date.
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