Tom Lee from Fundstrat believes the markets are benefiting from a substantial $6 trillion that has been sitting on the sidelines.
In a recent interview on CNBC’s Squawk Box, he highlighted that this large pool of liquidity may now be more influential in driving market trends than traditional macroeconomic data.
Lee explained that the market has defied expectations of hesitation ahead of the elections in October, demonstrating significant resilience. He suggested that this strength indicates macroeconomic indicators are becoming less relevant, with the abundance of cash playing a crucial role.
For the past two years, investors have been anticipating a recession, often associating an inverted yield curve with economic downturns.
However, Lee pointed out that the $6 trillion in uninvested cash could soon flow back into the stock market, particularly since October has historically been a strong month for market performance.
He noted that it appears many investors remain under-invested in stocks, as concerns about a potential recession in 2024 loom. Despite this, companies are exhibiting unexpected strength, as reflected in their earnings reports.
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