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 resulting from 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 a minimum of a 0.25 foundation level fee reduce – the markets will proceed to “commerce properly” for a number of weeks afterward.
“I feel if viewers are form of confused, I feel that’s what the following eight weeks are going to be like till election day.
I feel 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 optimistic 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 feel it’s going to provide the markets some confidence.
So I feel we do form of commerce properly into that assembly and possibly even the week or two after.”
Lee additionally says that traditionally, markets for threat belongings not solely do properly 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 feel within the close to time period, we’re shedding visibility and whenever you don’t have visibility, individuals get scared and sit on their arms.
However over the following twelve months, I feel traders ought to be fairly assured. When the Fed has reduce charges whereas in a smooth touchdown or no touchdown, the win ratio, or markets larger six, 9, 12 months later is sort of 100%.
And we additionally know post-election markets virtually at all times rally so the November-December appears to be like fairly good. I feel the insurance policies of each candidates are adequate for markets to do properly subsequent 12 months, so I feel we’d have turbulence now, however it appears to be like fairly good after that.”
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