The bull case for shares is alive as components of the financial system see ‘outright deflation,’ Fundstrat’s Tom Lee says

• The bull case for shares is alive and nicely, based on Fundstrat’s Tom Lee.
• Lee pointed to falling costs in 40% of segments reported within the newest CPI.

The bull case for shares this 12 months continues to be alive, as components of the financial system are actually seeing “outright deflation,” based on Fundstrat’s head of analysis Tom Lee.

In an interview with CNBC on Wednesday, Lee reiterated his optimistic view available on the market, regardless of latest turbulence in shares. His optimism stems from falling inflation, and he famous that round 40% of products and providers measured within the April Shopper Value Index had been now seeing costs fall moderately than simply enhance at a slower charge.

“I feel the bull case is prevailing,” Lee stated. “One of many largest purposes for this CPI report is the proportion of elements which can be really in outright deflation. So in the event you take a look at the worth degree, after which the place it’s now, these are off the height.”

Lee predicted the Fed would possible pause its rate of interest hikes, and stated there’s greater than a 50% probability that the central financial institution side-steps a recession.

Central bankers pushed rates of interest up aggressively over the past 12 months, a transfer that raised recession fears and pushed the S&P 500 down 20% in 2022. A drop in costs, a pullback in charge hikes, and averting a recession will possible set shares up for recent beneficial properties.

In March, Lee referred to as the beginning of a brand new bull market and forecasted the S&P 500 to leap at the very least 20% this 12 months and has stated that the market bottomed in October of 2022.