$5.5 Trillion in Cash Awaits Entry into Stock Market, Asserts Fundstrat's Tom Lee

Despite the corrective moves in the stock market at the beginning of August, hedge fund veteran Tom Lee maintains a bullish outlook.

Fundstrat's Managing Partner Optimistic About Equities Finding a Bottom for August - CNBC Interview

In a recent CNBC interview, Fundstrat Global Advisors' managing partner, Tom Lee, expressed his company's belief that equities are potentially carving a bottom for the month. Lee highlighted several favorable macro factors indicating positivity for the stock market.

He mentioned, "There are some constructive things that happened (on Friday) that make myself and Mark Newton, our head of technical strategy, think we're actually in a bottoming possibly for the month of August."

Lee pointed out that the sharp reversal of the dollar and the decline in yields are positive indicators for stocks as they have been significant headwinds previously.

Though the beginning of August has been challenging with rough four days, Lee remains optimistic due to the decent jobs number. He hopes for a positive Consumer Price Index (CPI) report in the coming week, which could serve as a roadmap for better stock performance.

The CPI is a crucial metric used to track inflation rates, and traders closely monitor it as it can potentially signal the Federal Reserve's stance on interest rates.

Lee also noticed that institutional investors have been quick to adopt a bearish stance following the recent correction. However, he believes that this sentiment shift indicates that the stock market is not yet euphoric, as there is still trillions of dollars waiting on the sidelines.

"I'm still pretty surprised how many of our institutional investor clients lean bearish. In the last four days, a lot of them have jumped on to bet against stocks rising. There are technical reasons to be a little bearish in August, but I think people are really quick to flip bearish here. That's not a sign of an ebullient market. It's a sign of people getting pulled in, and there's still $5.5 trillion of cash waiting to get pulled in.

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Aug 07, 2023