Many traders on the Street interpret recent global market weakness as a signal of imminent decline. Tom Lee, Fundstrat Global Advisors head of research and former J.P. Morgan chief equity strategist, counters that the advance has merely paused for a breather at adolescence.
Lee told CNBC’s “Squawk Box” on Thursday that the equity strength investors have enjoyed for ten years could extend for another two decades.
“It could reach 2035 or 2038,” Lee said. “That horizon aligns with the peak spending years of the millennial cohort.”
Lee added that the U.S. market “already sports a faint mustache – it has left its teenage years behind.”
On Wednesday the Fundstrat co founder sent clients a note that called the recent sell off a bottom. He urged purchase of battered names in industrials, energy, materials, technology along with consumer discretionary – he advised rotation away from defensive sectors. A quantitative screen produced twenty three recovery candidates, among them Home Depot Inc.
Lee projects a ten percent rise in equities by December 31, even as consensus warns of further losses born from a “total evaporation of confidence.”
In August Lee told CNBC’s Trading Nation that bitcoin would finish the year “explosively higher,” with a price target of twenty five thousand dollars. He based the call on a tight correlation between emerging market equities and the cryptocurrency.
The bull bear argument on the Street continues. Lee dismisses threats from rising rates – decelerating corporate profit growth, and U.S.-China trade friction. November has historically favored equities – the Dow, the S&P 500 in addition to the tech weighted Nasdaq have all closed higher in each of the past five Novembers.
During the CNBC interview Lee predicted a minimum thirteen percent rebound over the next three months – citing firm fundamentals and a supportive macro backdrop.