저자: The Creative Investor · 외국인
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Oh snap, Tom Lee is back. He just dropped some new predictions and insights for investors. This comes at a time in which there's a lot of bears. A lot of people are not going to want to hear this. But it's critical that you that you do and you try to look at the markets from a neutral perspective. Now, Tom Lee says here the upside case for stocks the rest of this year is strengthening.
Now, Tom Lee has a very interesting view of this market this year. He thinks we're going to have potentially a 20% decline this year before we enter what could be the strongest market rally that we have seen in our lifetimes. That could last anywhere from 18 to 24 months. History says that you're going to have a very strong rally after the midterms for about 9 months.
That's just what history says. Don't shoot the messenger. I want you guys to take a listen to what Tom Lee says here and then we will break it down in my opinion what we're going to see from the economy, from inflation, from the Fed, from earnings, from AI over this what could be very strong period for the markets.
But first, take a listen to Tom Lee and before all of that, hit that subscribe button if you guys are not already. Hit that like button and let's begin. Tom Lee, let's get let's get back to the markets. Obviously a lot a lot lot going on outside of the markets, but the market itself does seem to be kind of looking past the war in Iran, looking past any political event.
What is the market the most closely looking at right now? Well, I think the market at the start of this year maybe had three risks it had to get comfortable with. One is um Iran and a war potential escalation. A second was private credit. And the third is a new Fed chair. And what we've seen I think is that we we've come out the other side of this Iran war with the with the economy showing remarkable strength.
In fact, earnings estimates have been going up. So, I think we passed that test. And I think the underwriting for the private credit uh looks better than expected. I think that's why IGV is rebounding. And so, I think the up IGV? Oh, sorry. The software ETF. Okay. Uh cuz that fell all the way down to 72.
It's back to 85. And so, private a lot of private credit loans were tied to software. I think that that is looking less of a structural problem. And so, to me this means uh I think for stocks for the year the upside case is strengthening. I think S&P above 7,700 is very probable. What other are the kind of planks that feed into or build into that?
Well, I think one is uh earnings estimates are higher. And now we're uh seeing AI I think deliver productivity. And you know, earlier on CNBC Torsten was talking about how there is the positive case for AI which is, you know, business growth and company formation. And uh I think risk premia later this year drops because if we settle the issue in the Middle East, you know, you're taking out, you know, hostile oil premium that's been priced in oil for a long time.
So, I think that allows markets to lift higher. Oil is still at 95 bucks. I think and I tweeted out this morning that the market was kind of in the settle in mode. I think that oil hasn't moved really in a week or two. We're kind of now in this sort of stasis if you will with regards to that cuz I think you said on this program a couple weeks ago that that the the war was the most important thing in the short term.
What are the two possible outcomes for the markets vis-a-vis Iran? Ooh, best case, worst case. Yeah, and and these are pretty big um Yes, they are. They're they're they're it's on two very far sides. I think one is an extended war. And therefore uh it's a mirage that oil prices are low because now we're going to have a drought on a drawdown in inventory and lost production.
And so, I think uh price for all petroleum products jumps dramatically. And then that puts a lot of global growth at risk. Uh the other side is the war is resolved quickly. And that's through all the combination of pressures. I think the market is betting on a shorter war at the moment. So, a lot of the times in the recent years we've talked about stocks and bonds, but the strong performance of commodities has Michael Hartnett, Bank of America's chief investment strategist, saying a better portfolio positioning right now would be what he calls the sleep like a baby portfolio.
Uh he says it's a an equal weight allocation across stocks, bonds, cash, and commodities. Uh according to Hartnett, this four-way split is having its best year since 1933 and delivering one of its largest relative wins ever versus the traditional 60/40. Now, we all know every strategy can have a good year.
It's like a broken clock, right? But is this a a a working clock that people should think about this kind of allocation and sticking with it? I mean, there's a lot of logic to that cuz one, we know that gold's been a a really good total return performer. And so, I think gold should sit in portfolios which probably sits in commodities along with crypto.
Um and then I did hear someone earlier this year point out Nasdaq and oil are actually good counter hedges. So, in in some ways a 25 that portfolio does make a lot of sense. In fact, technology and energy have kind of been these you know, two sides of a balance. You know, you'll have a decade where energy does really well and then a decade where technology does really well, back and forth.
And what's interesting right now is that both of them are kind of doing well. Yeah. And maybe your point is you don't have to pick. Just own a little bit of all of them. AI's pulling both of those together anyways, right? Exactly. Exactly. And kind of changing a little bit, you know, we spoke with Roger McNamee last hour.
He expressed some concerns about what's happening with these AI models because they OpenAI in particular doesn't have the revenue to justify its CapEx right now. And we're about to go into tech earnings where all the focus is going to be on CapEx. Do you have any concerns that there isn't going to be a pot of gold at the end of this CapEx rainbow?
Uh yeah, I mean, it could play out several ways. You know, of course there could be a some breakthrough where power consumption drops. Um but uh as you know, we are we are consuming every piece of compute. So, to me it it does seem too early to worry about that as well. So, I generally agree with what Tom Lee said there.
I think it's hard to argue that from a from a logical perspective. Now, you know, I think it's just a little different how you really have to think about the markets right now. Um because some areas have done well, some areas have done really poorly. And I think this is going to be a stock picker's market for a while.
Like for an example, the war trade, the recession trade, consumer defensives, utilities, industrials, areas of health care, um energy, right? These are not areas I think are going to do well. They're just not. So, when when we're thinking about the broader markets, those areas I would steer clear of, right?
Trading at 10 to 30-year hot record high valuations is not attractive to me. And that's coincidentally where a lot of people are invested right now because they have done well. Perversely, I think a lot of software companies that do well on earnings that don't have this AI disruption risk could do really well and re-rate to the upside.
I think tech companies, same that have good earnings, that do well, could re-rate to the upside. I think some areas of health care look okay. I think financials look really good. I think consumer cyclicals could be a once-in-a-lifetime buying opportunity. Where people are fearful about the economy, they're fearful about inflation, they're fearful of a recession.
And consumer cyclicals, you know, think Tesla, think uh beauty companies, think clothing companies, right? They've just not done well because of perceived weakness coming from the consumer and in the economy. Now, there's a lot of people that have speculated that we could see like stimulus checks from Trump over the summer.
I know I've mentioned that before on this channel. That is certainly a possibility that would drive upside for cyclicals. That would strengthen the consumer, strengthen consumer spending, and that would obviously be positive for those areas. Potentially financials would also benefit in that kind of scenario.
And a lot of people think a stimulus check is coming because it's a midterm election year. Republicans have had a lot of damage done to them by Trump and this war with Iran and simply gas prices. Now, what happens in the near in the near term for markets largely comes down to the Iran war. If that comes to an end, I think it's pretty well priced in the markets.
But in that scenario, if the war comes to an end, we can start to think about earnings. We can think about the economy. We can price in other positive things that have been happening this whole time because the the main risk event, which is the Iran war, will be over with. That's a possibility that could be happening.
That that could happen. Wednesday and Thursday are going to be huge days this week for the markets. Es- es- especially if the war with Iran ends. If not, then Wall Street's only going to care so much about earnings, especially good earnings. They're going to be like, "Okay, earnings were good, but what if the war with Iran begins again?" Now, from a uh more medium-term perspective, throughout the rest of this year, I think again up until October, November, the midterms are on November 3rd.
Historically, the markets bottom in late September and then rally into the midterms, rally into October. Um I'm not expecting anything too crazy between now and October for the headline markets, whereas Tom Lee maybe is a little bit more bullish there. I think during a midterm election year, um you're probably going to have just more to deal with.
Okay? Some areas like cyclicals could come back. Some software stocks could continue to work. Some financials could continue to work. And maybe the once-in-a-lifetime buying opportunity is not next month, but right now for some of those stocks. Now, maybe they continue to fall. That's that's I guess the the gamble that you have to gamble with at this point.
But that's where it makes sense to be a longer-term investor here. From October of this year until about July of next year, you're likely to have a very strong rally. But all else equal, if Trump doesn't create another crisis, you're probably going to see a very strong multi-year rally. Why? Let me tell you.
New bullish Fed chair. They're talking about recalculating the way inflation is calculated. Let me tell you right now, inflation's been below 2% for over a year based on other market indicators for inflation. All of a sudden, problem solved on inflation. Even then, I do think CPI is coming down to 2% by the end of this year.
JPMorgan also holds a similar view, or at least some of their strategists that I've heard. And I think that's going to happen. I think it fuels some rate cuts and fuels real estate to pick up. Real estate is the sleeping catalyst for this this economy, really. Why? Because households have 70% of their net worth tied up into their homes and home equities.
And it hasn't moved. Right? You know, real estate, you can't really buy, you can't really sell, low inventory, unaffordable mortgages. If rates come back down to even 5% and stay there, that's going to unlock a lot of extra money for people. It's going to get things moving. Who also benefits during that?
Financials benefit dramatically, okay? So, inflation coming down, rates coming down, real rates like mortgages likely coming down as well. I think oils obviously going to come down. These things help the consumer. If we get a stimulus check over the summertime, couple hundred bucks for quote-unquote gas prices, great.
That also helps the consumer. Very very easy to build a bull case on consumer cyclicals right now. It quite perversely to how markets are pricing consumer cyclicals. And I think the bottom line is something Wall Street has really been overlooking um for the past couple of months, we are at the start of the biggest technological revolution we're ever going to see in our lifetime.
It's going to be bigger than the internet. It's going to touch everything. It's going to touch health care, obviously manufacturing, uh robotics, like humanoid robotics, software, everything. There's going to be huge winners in every single category. We're not pricing that in. If you can go out and look and find those winners, you're going to make an absurd amount of money.
An absurd amount of money. It's going to be ridiculous for you, okay? That is what we are doing in the trading community. That's what I've been specializing in for years, executing on very well. If you guys want to join, that link is down below in the description of today's episode. Look, the bottom line is I think we're going to have inflation that continues to come down.
I think the war with Iran will ultimately end. I think Republicans are probably going to lose the midterms. That creates a a stalemate in Congress. A lame duck session is what it's called. You don't get anything done. Wall Street loves that. I think you're going to have an economy that continues to surprise to the upside.
I think you're going to have AI investments that continue to be strong and productivity that actually begins to kick in and justifications around all of the investment dollars that have been spent. And I think you're going to have an environment where again, kind of as Tom Lee would say, well, the markets have have dealt with a lot, right?
We've we've come through a lot, and you could see a lot of money rush into this market, especially as real estate transactions pick up and again, economy gets stronger, and maybe there's less of an alternative, right? There used to be a saying on Wall Street called TINA. It It stood for there is no other alternative.
You had to own stocks. There was no other alternative. There has been an alternative now for years. That is bonds, okay? So, new Fed chair, it's going to be more bullish, more rate cuts, let me point that out. There's a lot of stars that are aligning for this market to do exceptionally well over the next couple of years.
You need to position for this right now. Not tomorrow, not next month. Figuratively speaking, you you definitely can and you should continue to invest into this market every paycheck, every month, however you do it. But I think the opportunity is now. Not in the headline S&P. If you're trying to make a lot of money, you got to go out, you got to find those stocks that are under the radar, that are not being fully priced in.
Let me tell you the areas that you want to do this. Consumer cyclicals, financials, communication services, technology. Specifically within technology, yeah, there can be semiconductor winners that are maybe a little underlooked right now. Software. Software, that's my favorite area of technology. Software is going to be one of the biggest winners from AI, period.
Some software companies are going to absolutely change the game with AI. Zeta is one of them. Crazy, right? Stock trades at a 15 times forward PE, grew revenue 30% last year, set to grow revenue 35% this year. They've beaten and raised for 5 years now, 18 quarters, okay? Beat and raised 18 quarters.
Crazy. Very predictable and reliable beat and raise company on earnings. Trading at a 15 times forward PE with free cash flow exploding and finally becoming bottom line profitable. Can't make this up. You know, the CEO himself said revenue will at least double or 5x at some point in the future. Yeah, like you just you can't make these opportunities up if you tried, right?
There's a lot of those. Consumer cyclicals, financials, right? But you got to do a little bit of research. You got to dig a little bit. us, that link is down below in the description of today's episode. Hit the find value or perspective out of today's episode. Have a great rest of your day and a great night. I will see you in the next one.
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