Fundstrat’s Tom Lee says markets are getting a boost from the $6 trillion that has been sitting on the sidelines.
In a new interview on CNBC’s Squawk Box, Lee say that the vast amounts of available liquidity may now be more relevant to determining whether markets remain in an uptrend than macroeconomic data.
“We’ve been fooled a bit by seasonality because we thought the markets would be hesitant before the election and it’s October, but we’ve seen this market be incredibly resilient. So I underestimated how strong this market has been. I think this really shows that macro data is becoming less and less important, and that is now due to the fact that there is a lot of money on the sidelines.
Investors had been expecting a recession for the past two years, or so many thought at the time [Yield] curve is no longer inverted, we have a recession. But at the end of the day, there’s $6 trillion in cash sitting on the sidelines, and October has proven to be a great month.”
With markets continuing to be strong, he suggests people were squirreling away money in anticipation of a recession, which could return to the stock market and send stock prices even higher.
“It feels like investors are investing too little in shares. I think there are people who fear 2024 and think this is the year we will enter a recession. Instead, and we see this in the earnings figures, companies have been very resilient.”
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