With stocks at all-time highs, one of Wall Street’s greatest bulls is taking his optimism up a notch.

Federated Hermes’ Phil Orlando believes the S&P 500 could hit his year-end value goal of 4,500 by July, which means about an 8% acquire from present ranges.

“At the tempo the economic system is rising and earnings are rising, you recognize we would get there earlier,” the agency’s chief fairness market strategist advised CNBC’s “Trading Nation” on Friday.

Last week, Orlando’s agency upgraded its GDP forecast to six.4% for the year, citing the optimistic impression stemming from President Joe Biden’s $1.9 trillion coronavirus help bundle. Federated got here into the year with a 6.1% forecast.

“If we’re proper with our 6.4% estimate, that is going to be the strongest full-year GDP progress since 1984. We posted a 7.2% fee,” mentioned Orlando.

The improve comes as earnings season kicks into excessive gear. So far, Orlando likes what he sees.

“First quarter earnings are coming in very sturdy. Looks like we could be up 30% year over year. The earnings recession is over,” mentioned Orlando. “In the second quarter, which is able to benefit from the full profit of some of this fiscal stimulus, we could be taking a look at an earnings progress fee twice that on a year over year foundation.”

But his optimism comes with a catch: Orlando is anxious in regards to the year’s second half as a result of an absence of clarity surrounding the long run of an infrastructure bundle and inflation. He believes the dangers could weigh on stocks and spark a correction.

“The query is after we get to the top of the summer time, and we’re taking a look at say a Core PCE [personal consumption expenditures price index] that is up round 2.5%, is that going to plateau after which start to normalize? You know, is it transitory in Fedspeak? Or, have we began to sow the seeds of a extra sustainable improve in inflation? We do not know the reply to that proper now,” mentioned Orlando.

If inflation proves to be lasting, he wonders if the Federal Reserve will modify its simple cash coverage as 2021 progresses.

“These are essential questions,” he mentioned. “Right now we’re simply going to have to observe and wait and make our greatest judgment later within the year.”

For now, Orlando, who oversees greater than $619 billion in property, is not making any large strikes. He’s sticking with a playbook designed to revenue from the reopening economic system and a monster market year.

His high picks embrace financials, energy, consumer discretionary, industrials, small caps and worldwide stocks, with an emphasis on emerging markets.

“Those classes have outperformed progress and technology since final Labor Day,” Orlando mentioned. “We suppose that commerce has legs, and it’ll proceed by way of the stability of this year — most likely into the early levels of subsequent year, as effectively.”

CNBC’s Robert Hum contributed to this report.

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