![]() But as we highlighted a few months ago, we have entered a ‘buy the dip’ regime, so 2 per cent pullbacks are generally buyable. “I think this will still be the case in the second half. “The equity market has been a ‘game of inches’ all year, with a lot of blocking and tackling, and then periods of market progress,” Mr Lee said. Mr Lee puts the amount of cash that investors hold at a massive $US5.5 trillion which is one reason why he’s so bullish on equities, and also why he said that investors needed to time getting back into the market. According to Bank of America’s weekly flow report, around $US752 billion ($1.13 trillion) has flowed into cash so far this year versus $US32 billion invested in US stocks. The S&P 500’s 17 per cent rally year to date, however, has left many investors on the sidelines. In June, the Fed skipped raising interest rates for the first time in 15 months, leaving rates in a range of 5 per cent to 5.25 per cent but forecast a half a percentage point increase to the benchmark by the end of the year to quell price pressures.įed futures imply a three-in-four chance the central bank will lift the funds rate by a quarter of a point to the range of 5.25 per cent to 5.5 per cent. It said that weakening price pressures could convince the US Federal Reserve that price stability was within reach, without a recession and the need to lift rates much further. ![]() Goldman Sachs concurs and recently pared back its inflation forecast for this year. ![]() Mr Lee, who’s been optimistic about the US sharemarket throughout 2023, said while his forecast was “aggressive”, a downshift in headline inflation towards 3 per cent on an annualised basis in the second half would be a key driver. “We expect consensus to remain sceptical of markets in the second half of this year, so we are prepared to be dealing with lots of pushback,” Mr Lee said in a note. The benchmark gauge’s current record high is 4821. He has lifted his year-end target for the S&P 500 by 75 points to a new record of 4825, that’s more than 8 per cent higher than the July 3 close. That’s also how Fundstrat Global Advisor head of research Tom Lee views the market. This is why the dips in strong stocks tend to get bought.” Hedge fund manager Howard Lindzon echoes that sentiment, saying investors looking for an end to the rally are missing the point: “The biggest risk for a money manager during a bull market is not participating in it properly – being underinvested or underperforming. “Most of the time the trend is right and fighting it is a losing strategy,” said Ben Carson, a portfolio manager at New York-based Ritholtz Wealth Management. The pace of the US equities rally, which has pushed the S&P 500 into a bull market, has confounded even the most optimistic of market pundits, with some now starting to advise clients to hold off from investing more money.įor the sceptics, the market’s strength is frustrating because valuations are stretched, earnings are poised to fall, inflation is still too high, interest rates have further to go, and a recession still lies ahead.įor now though, momentum favours the brave.
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