Two seemingly contradictory sentiments have dominated the stock market throughout the initial eight months of 2024: determined bullishness and recessionary dread.
Finally, on September 3, 2024, one expert who has been continuously optimistic – Fundstrat’s Tom Lee – has turned wary of a coming pullback.
In an interview on Tuesday, Lee explained he believes that a 7-10% pullback is in the cards – and that it is coming soon – but he yet again went against the grain with a bullish undercurrent.
Why Lee remains optimistic despite forecasting a massive pullback
According to the expert, the coming downturn will present more of a ‘buy the dip’ moment for investors than signal the beginning of a major stock crash or a recession.
Still, the analyst – known to make the very same recommendation for buying shares once they drop throughout 2024 – has urged caution.
Lee believes that the pullback could extend beyond September – historically a weak month and one that traders have been bracing for some time – and that, while one finger should be kept on the buy button, the likely imminent interest rate cuts and the November elections could keep things unstable.
Ultimately, the analyst considers it likely the downtrend will persist for approximately 8 weeks – past the mid-point of October.
Wall Street experts turn Pythian on a U.S. recession
Much like the overall investor sentiment and Lee’s own assessment, market analysis has continued showing signs of a split personality into September.
There is a significant degree of optimism surrounding rate cuts – an event that could drive most risk assets, and likely many others, up – but there remains a looming concern that one economic metric or another – perhaps another weak employment report or reheating inflation – could come in worse than expected.
The springtime warning of one of ‘The Big Short’ investors’ cautioning that monetary policy loosening may be the straw that breaks the camel’s back and triggers a collapse also presents cause for some sleepless nights in September.
Major institutions have not been spared such ambiguity either. One of the most recent examples comes from Bank of America (NYSE: BAC) which, on the one hand, warns that a recession may be coming in the coming three months, and on the other states that its Sell Side Indicator (SSI), is ‘getting bullisher and bullisher.’
JPMorgan (NYSE: JPM), long under fire for similarly being simultaneously euphorically bullish and depressingly bearish, at press time on September 3, sees a similarly ambiguous, 35% chance of a recession.
Ultimately, the only thing that appears truly certain as 2024 rolls into its ninth month is that experts and analysts have turned very Pythian and that recessionary forecasts may now be like saying there will be rain without precise meteorological equipment – not particularly useful, yet guaranteed to eventually prove correct.
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