Inventory market bull Thomas Lee of Fundstrat has invited buyers to “again up the truck” and cargo up on the commerce war-induced dip within the S&P 500. His shopper letter comes on the finish of an action-packed week filled with financial information, a landmark interest rate decision, and political wrangling that induced volatility to spike throughout the board.
Friday's July payrolls data was largely overshadowed because the Fed stole the highlight on Thursday. Although the central financial institution lower charges for the primary time in 11 years, Chairman Powell's feedback weren't sufficient to satiate the bulls. Powell left little affirmation on the desk for additional charge cuts later within the yr.
That and the surprising announcement of an extra $300 billion tariff transfer by President Trump was greater than the market might deal with. Shares completed sharply decrease with the Dow Jones Industrial Average down by 2.6% or 707 factors for the week to 26,482 by shut on Friday.
This has occurred 2-3X prior to now 12 months and brings out the shrill within the bears… and every time, these pullbacks wanted to be purchased.
We nonetheless see a 2H19 rally and upside nearer to 10%… BUY THE DIP!!!
— Thomas Lee (@fundstrat) August 2, 2019
Tom Lee Stays a Dedicated Bull
Regardless of blended emotions from market commentators, Lee seems to face agency in his bullish convictions. Fundstrat's co-founder has been an avid purchaser in latest months at the same time as recessionary calls develop louder.
Lee expects the longest-running growth in U.S. historical past to proceed into the second half of the yr. This can be a merchants' market, and buyers would have carried out comparatively properly shopping for into any weak spot.
Regardless of Powell's lackluster feedback on Thursday, market members are nonetheless anticipating a 100% chance of a charge lower come September. That's “including gasoline” to the inventory market fireplace, in line with Lee. The ensuing developments in different asset lessons additionally affirm his bullish thesis, as CNBC reports:
“We see a falling 10-yr and weakening USD and better odds of a September lower as VERY BULLISH—therefore, we strongly urge buyers to make the most of this weak spot”
The Inventory Market Is Six of One and Half-a-Dozen of the Different
The market has largely traded sideways since 2018, highlighting the continuing uncertainty that long-term buyers are going through.
Nevertheless, Lee means that one other 10% is up for grabs, which might deliver the Dow Jones to an all-time excessive simply above the 29,000 deal with.
If he is proper, time could also be quick earlier than the truck pulls away.