According to one prominent economic analyst, the stock market could be poised to literally rip people’s faces off this spring.
OK, maybe he doesn’t mean that literally, but if you listen to Tom Lee, he might just have you convinced that the strong start to trading so far in April is likely to last for the rest of the month and perhaps even the rest of the spring.
Lee, the co-founder of Fundstrat Global Advisors, made his bold prediction on an episode of CNBC’s “Fast Money” recently. “Face ripper,” by Lee’s definition, is a market that’s really strong and also comes as a bit of a surprise.
A strong April is in line with what a lot of other economic analysts are saying, and their forecasts are already looking promising based on the three days of strong rallies to kick off the month. But Lee is basing his prediction not so much on the notion of economic improvement, but on how he believes that companies are poised to really become players in the stock market. He states that institutions have raised nearly $200 billion in cash since 2021 began, yet they haven’t spent any of this capital in the stock market yet. That, combined with other signs of economic recovery, are likely to take stocks even higher in the weeks and perhaps even months ahead. In fact, the market could be so promising this month that Lee sees the S&P 500 rallying by as much as 3 percent by the end of April.
So what comes after the “face ripper rally?” That’s the big question right now. Lee says there might be a choppy period of ebbs and flows that characterize the market later this spring and into the summer.
As we alluded to earlier in this piece, Lee is hardly the only one that’s projecting stock gains the rest of the year. Some economists have predicted that once the coronavirus is contained, we could be seeing a modern-day version of the “roaring twenties” period from 100 years ago — a period that was characterized by wild economic growth and consumer spending. As Americans get back to work and as more firms begin to resume hiring, there’s reason to believe that we’ll see the economy follow suit
But in the near-term, a face ripper rally is certainly an interesting one to be mindful of — at least if you take Tom Lee’s word. Another interesting tidbit about Tom’s firm is that it was very hard hit by the economic fallout from the pandemic, yet stands to gain a lot from the ongoing economic recovery. We’re going to bet that his firm isn’t the only one.