Good evening:

What a summer rally it’s been for markets. Amid the hubbub of recessionary fears, 40-year-high inflation, war, supply chain challenges, and rising rates, everyone has become fixated on a new question: Given the recent rally, is the bear market of 2022 over? Tom Lee, our Head of Research, forecasted a “treacherous” first half of negative market returns. For weeks now, he’s been saying the bottom is in, and he believes most companies can generate double-digit earnings growth in this environment. The VIX has fallen below 20 for the first time since April, inflation is cooling, and a soft landing seems more possible. More than 80% of the stocks in the S&P 500 are now above their 50-day moving average, another potential positive signal.

“I think there’s more good news in the pipeline on inflation,” Lee said Friday on CNBC. “1982 tells us we could have a very steep stock market move (upward)…I think the all-time highs this year will be realized before year-end.”

Wall Street saw a large uptick in buyers on Wednesday, as signs of cooling inflation sent the major averages upward. The Dow Jones Industrial Average added more than 500 points, while the S&P 500 rose more than 2%, with all 11 sectors of the benchmark index finishing higher. T...

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