In an look on CNBC’s “Squawk on the Road” on July 1, Tom Lee, co-founder and head of analysis at Fundstrat World Advisors, shared his ideas on the present state of the markets, his predictions for the S&P 500, and his bullish thesis on Bitcoin.
Market Outlook and S&P 500 Predictions
Lee started by discussing the general market circumstances and his expectations for the S&P 500. As of mid-2024, Lee highlighted that earnings for 2025 are trying stronger than anticipated, with estimates rising from an preliminary $260 to doubtlessly $275, $280, and even $285. He believes this improved earnings outlook is coupled with a doubtlessly dovish Federal Reserve and a softening employment image, which may result in greater price-to-earnings (PE) multiples.
Lee emphasised that if the S&P 500 achieves earnings of $285 and applies a PE a number of of 20, the index may attain 5,800 by year-end. This projection implies a continued however extra average progress in comparison with the primary half of the 12 months. He famous that such a state of affairs would end in a complete return of a bit over 20%, a major determine given the market’s efficiency over the previous two years.
Impression of Money Holdings
Lee addressed the massive money reserves held by traders, amounting to $6 trillion. He steered that this substantial liquidity, which has been sitting in money incomes 5%, would possibly quickly face a “Day of Reckoning” as traders understand they’ve missed out on important market positive factors. This realization, he says, may drive extra funding into equities, additional supporting market progress.
Sources of Liquidity
When questioned concerning the origins of this liquidity, Lee acknowledged that it’s a mixture of earned earnings and stimulus measures. He identified that whereas the fiscal deficit stays excessive, a lot of the money comes from earned earnings on belongings, which traditionally would have been reinvested into the economic system or equities.
Bitcoin Thesis
Tom Lee additionally mentioned his bullish stance on Bitcoin, reiterating his goal of $150,000. Regardless of earlier volatility and skepticism, Lee stays assured in his projection. He attributed the latest struggles of Bitcoin to the overhang of the Mt. Gox distributions, which have been a priority for years. Nonetheless, with these distributions anticipated to start out in July, Lee anticipates a pointy rebound within the second half of the 12 months.
Lee reminded viewers that Bitcoin’s positive factors are sometimes concentrated in only a few days annually. Particularly, he famous that if the ten greatest days are excluded, Bitcoin would have unfavorable returns yearly.
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