Are you ready to kick off your investment strategy for the month ahead? According to Fundstrat’s Tom Lee, now is the time to buy stocks in anticipation of the April CPI report release next week.
Lee’s analysis suggests that the current market conditions are favorable for higher stock prices as disinflation continues to make progress. In his recent note, Lee highlighted the potential impact of an in-line CPI report or better, which could increase the likelihood of three interest rate cuts by the Federal Reserve this year.
The “buy in May” trade is still in full force, with the S&P 500 already seeing a 4% increase this month. Lee expects this momentum to continue, especially after the April CPI report shows signs of disinflation progress. This could lead to investors pricing in more than two interest rate cuts by the end of the year.
Economists are predicting a 0.31% increase in the April Consumer Price Index, which is set to be released next Wednesday. Lee’s bullish outlook is supported by ongoing declines in the volatility index, the US dollar, and long-term interest rates. Additionally, other central banks like Sweden’s Riskbank and the Bank of England are starting to signal potential interest rate cuts.
Lee’s advice? Keep up the “buy in May” strategy. The recent stock market gains and expected softening of key inflation components in the upcoming data release indicate a positive outlook for investors. Stay tuned for more updates and insights on our Extreme Investor Network website. Happy investing!