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“Spring is sooner recognized by plants than by men.” ∼ Chinese Proverb

Good evening:

Head of Research Tom Lee believes that global central banks, led by the Federal Reserve, might soon halt interest-rate hikes, setting the stage for rate cuts by the end of the year. You can see it in inflation, which remains stubborn, but has been falling, especially in the leading indicators we track. You see it in the jobs data, which shows signs of cooling recently. And you see it after the banking industry’s woes.

Recall that we entered this year on the heels of a tech selloff, an ambitious hiking cycle to ease sky-high inflation, and widespread bearishness. It was the worst year for investors since 2008. But stocks tend to bottom before fundamentals, as Lee says, and the market has been in an uptrend since last October. The last three months have been a story of resurgence, particularly for the previously beaten-down mega-cap technology companies. 

Before the holidays, Lee shared his 2023 Outlook and bullish S&P 500 price target of 4,750 this year. The benchmark closed Thursday above 4,100, well on its way toward Lee’s target. Technology, his top pick for the year, has led the way.