Fundstrat’s Tom Lee is anticipating a number of weeks of excellent efficiency for the inventory market following this week’s Federal Open Market Committee (FOMC) assembly.
In a brand new interview on CNBC, Lee says that whereas traders are cautious about markets as a consequence of uncertainty surrounding the upcoming US election, financial information is nonetheless leaning in favor of threat belongings.
The veteran investor predicts that after the FOMC assembly – which is anticipated to conclude with not less than a 0.25 foundation level fee reduce – the markets will proceed to “commerce nicely” for a number of weeks afterward.
“I believe if viewers are type of confused, I believe that’s what the following eight weeks are going to be like till election day.
I believe it’s a really difficult interval as a result of nobody can have conviction till they actually know who’s within the White Home.
However there are some constructive helps coming into play and [this] week is the Fed assembly. We all know the Fed goes to make some cuts and with the inflation information being supportive and the labor markets needing some assist, I believe it’s going to offer the markets some confidence.
So I believe we do sort of commerce nicely into that assembly and perhaps even the week or two after.”
Lee additionally says that traditionally, markets for threat belongings not solely do nicely after fee cuts when not in recession, but in addition after presidential elections. The strategist believes that the markets ought to nonetheless rally irrespective of who wins the election in November.
“I believe within the close to time period, we’re dropping visibility and if you don’t have visibility, individuals get scared and sit on their palms.
However over the following twelve months, I believe traders must be fairly assured. When the Fed has reduce charges whereas in a gentle touchdown or no touchdown, the win ratio, or markets larger six, 9, 12 months later is nearly 100%.
And we additionally know post-election markets nearly all the time rally so the November-December seems to be fairly good. I believe the insurance policies of each candidates are adequate for markets to do nicely subsequent yr, so I believe we would have turbulence now, however it seems to be fairly good after that.”
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