Tom Lee, the Managing Partner at Fundstrat Global Advisors, is feeling good about the stock market's prospects for the next year. In a recent interview, he laid out why investors should be feeling pretty confident about where things are headed. I encourage you to grab a cup of coffee and listen to him yourself in the video.
My brief commentary can be found below, including a look at Sweden (because I live here..).
Why the Optimism in the US?
So, what's driving Lee's upbeat mood? He sees a few key factors playing in the market's favor:
Economic Resilience: Despite all the recent chaos, the U.S. economy is holding up well. Jobs are bouncing back and consumer spending remains strong, setting up a solid base for market growth.
Fed Policies: Yes, inflation is still a concern, but it's moving in the right direction. It's clear that they aim to control inflation without choking off economic growth, which he sees as a positive sign for investors.
Corporate Earnings: The major companies have been showing up with strong earnings, and Lee expects this to continue due to consumer demand on the rise and improving supply chains.
Be that is may, it will not be smooth sailing. There will be volatility and some turbulence but, as mentioned in this previous note, this can create good buying opportunities to capitalize on.
My Takeaway - Looking Beyond the US
Tom Lee is a smart guy, and I listen to what he says for a reason, but he can be overly bullish sometimes. In general, his opinion is similar to my view on the current outlook, which is cautiously bullish. For now though, I'm keeping 10-15% cash in my portfolio as a precaution.
The US economy will be the driver of the bull market (if there is one), hence the focus on it's economy. Nonetheless, many central banks across the world in important markets are expected to make rate cuts due to a lower inflation and relatively low and stable unemployment levels. Unemployment will likely continue to decrease across the board as central banks switch part of their focus from combatting high inflation to general market stimulation, in turn greasing the wheels of the labour market.
Sweden: Short-Term
The exception in terms of unemployment is Sweden, which has the 4th highest unemployment levels in the EU at the moment. Additionally, Sweden also faces very high youth unemployment, registering 24.4% at the time of writing. This is second only to Spain among EU counties. Not very impressive, to say the least.
As a Swede myself, I'm not very optimistic about the Swedish market over the next 6-12 months and I believe better better risk for return can likely be found elsewhere, such as the US.
Sweden: Long-Term
Once the (hopefully) short-term unemployment situation starts to improve, my outlook on Sweden will likely change drastically. I believe the long-term potential is there due a very high degree of digitalization throughout society, extremely well-developed industry and service sectors, and a very strong tech sector compared to European countries. If we are in the beginning of a 4th Industrial Revolution, I believe Sweden is in a decent state to be one of the European leaders long-term.
By J
Comments