Market strategist Tom Lee believes the US inventory market will enter bear territory this 12 months, however not earlier than ascending to a brand new file degree.
In a brand new CNBC interview, Lee predicts that the S&P 500 will proceed to rally within the coming weeks after largely buying and selling in a slender vary up to now this 12 months.
However Lee warns that inventory market bears will doubtless come out in full power towards the tip of the 12 months.
“Our take is that we do anticipate that decline to occur when markets don’t reply to excellent news. So I believe we’re in a interval the place we had a bear market already in software program, the Magazine 7, and in crypto.
I believe that’s already taken out plenty of hypothesis. So to me, I believe our wager can be that markets are literally going to carry via the tip of the month, that we’re going to really be constructive for March, and perhaps hit 7,300. Later within the 12 months is once we assume a bear market may present itself.”
Taking a look at oil, Lee explains why value spikes are bullish for the inventory market.
“One, the US is an exporter of oil, so we web profit as an economic system from larger oil [prices]. The second is that different nations are importers. So the US not solely seems higher, however on a relative development foundation, it ought to outperform, which implies flows again into the US, and the third is, as we fear about international development for all the explanations you described, when development is scarce, individuals purchase development shares. The US inventory market is a development index, so it’s popping out of the remainder of the world again into the US.
So I believe it’s a rotation story.”
At time of writing, the S&P 500 (SPX) is buying and selling at 6,672, whereas oil (WTI) is value $95.63 per barrel.
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