Not much on Wall Street has been able to call out a huge comeback for the S&P 500 this year after the index plunged into its first bear market in a generation last year. But then there was Tom Lee. Last December, the veteran analyst and co-founder of Fundstrat Global Advisors argued that the S&P 500 would jump more than 20% this year to 4,750 — a price target 17% higher than the median Wall Street forecast. And in March, Lee doubled down on his bullish stance, arguing that stocks were just as well about to rise Due to low inflation, a pessimistic Fed, and reasonable valuations after a dismal 2022. Since then, the S&P 500 has gained nearly 10%, for more than 14% of its rally to date. Well it sounds like Lee’s speculation, and now he’s back with another big call.
Lee, generally known for it rising Cryptocurrency expectations and support, she says stocks will continue higher. Despite more than a year of consistent recession forecasts from Wall Street (perhaps amounting to the most widely predicted recession in history), it has indicated that the economy has remained resilient, with the unemployment rate hovering near pre-pandemic lows and sustained GDP growth. total in the United States. First Quarter.
“I think that instead of unfolding into a recession, the economy is actually sliding into expansion,” Wall Street’s biggest bull Tell CNBC Monday.
This is what mine sees everyone else might be missing.
“Earnings Conditions to Outperform Actually”
Investment banks have repeatedly warned that rapid increases in federal interest rates will eventually slow the economy enough to ignite a recession, with some top strategists predicting that corporate earnings will fall throughout the remainder of the year and destroy stock prices. But Lee pointed to falling commodity prices, recovering supply chains, and a strong labor market as evidence that the economy — and American businesses — may be in better health than many imagine.
“I think these are conditions for earnings to actually outperform, and at a time when the situation for investors is very skewed,” he said, noting that investors have been “very cautious” to invest this year amid consistent predictions of a recession.
Lee has seen some recession fears on Wall Street turn into FOMO (fear of missing out) in recent weeks, which could increase flows into the stock market. And while many analysts have warned that this year’s stock market rally has been mainly led by a few tech giants, the Fundstrat co-founder doesn’t see that as a negative.
“I don’t think stocks are overextended. I think FANGs did the heavy lifting (in this year’s rally),” he said, referring to the popular tech basket Facebook-Apple-Netflix-Google, “and if we’re sliding into expansion, a lot of other names I’m going to share.”
Lee is not entirely alone in his optimistic view. said Guy Hatfield, CEO of Infrastructure Capital Management luck He believes inflation will fall to just 3.1% in June, which will enable the Fed to end the campaign of rate hikes that has hit stocks later this year.
“We think the Fed will have to succumb to the ‘established’ theory of inflation, just as it has succumbed to the ‘transitional’ theory, in which annual data confirms that inflation is declining,” he said.
Now Hatfield sees the S&P ending the year in a 4,500-5,000 range, with inflation fading and “the artificial intelligence boom continuing to fuel the stock market and boost economic activity.”
For Tom Lee, the only thing that could kill the market rally this year is an aggressive Fed, some economists said. luck Earlier today, it wasn’t convinced it had fully caught up to inflation just yet. But Lee does not see this happening.
“I think that level of inflation will start to look more acceptable to the market and to the Fed,” he said. And then the question is: ‘Is the Fed okay with where stocks are’? And I think they are.”