Last Thursday (April 23), in the midst of the COVID-19 pandemic, Thomas Lee, Co-Founder, Managing Partner, and Head of Research at independent research boutique Fundstrat Global Advisors, talked — during an interview with CNBC — about the future performance of the U.S. stock market, more specifically, as measured by the S&P 500 index.

The interview started by Lee being asked how is it possible to be holding up “reasonably well” despite the economic mayhem caused by COVID-19; in other words how could one “square the economic disaster and the market.”

Lee replied:

“Well, I don’t blame anyone actually because we’re in that period of time where we’re in a downturn of a cycle. The stock market starts to move ahead of fundamentals.

“I think we are in a period where — like I heard you mentioned — jobless claims are going to be awful. People are losing their jobs and businesses are shutting down, but the equity market generally bottoms ahead of the economy.

“Since 1929, if you look at how markets behave, it’s always bottomed before the economy, but even in the last three bear markets, it bottomed before jobless claims peaked.

“So, I think in some ways the stock market is sort of giving us a signal looking six months ahead and saying things aren’t as bad.”

Lee was then asked how he sees the U.S. stock market in six months from now.

He answered:

“A lot of it is dependent on a couple of things happening.

“One is the COVID crisis really does need to sort of be apexing in the rearview mirror… and that could happen in the next few weeks for the U.S. So, we could start to see a reopening economy…

“The second is that the governors who really are controlling this process really develop a framework that makes them comfortable to reopen the economy.

“So, I think that would investors to start to price in the support that’s coming from both the Fed and central banks and fiscal policy, and also companies can start to provide some certainty.

“I think that’s going to lift stocks. So, I think stocks are higher six months from now.”

Later on the same day, Lee sent out the following tweet that summarized what his colleagues at Fundstrat expected from the S&P 500 in the short term and also what the current investor sentiment is like (based on replies to some of his recent tweets):


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