Widely followed analyst Thomas Lee expressed a bullish outlook for stocks on Wednesday, arguing that the pullback that has marked most of the early months of 2022 has gone too far.
“If we avoid recession, which is our belief, then stocks have discounted more than a recession,” the Fundstrat Global Advisors research chief told CNBC.
“People are pricing in a calamitous scenario and that’s when stocks can start to rally,” he added.
Lee acknowledged that the stock market is “going through a very difficult period,” driven by a “hawkish” bond market and cautious consumers, who have “taken a pretty big hit” due to inflation and higher energy prices.
That said, Lee pointed to bullish conditions, including the large amount of cash that consumers hold and consumer confidence signals that seem to underestimate the underlying strength of the economy.
Lee argued that these factors could combine to create “a positive surprise coming out of the consumer.” He added that defense spending spurred by the Russia-Ukraine conflict could add to economic growth as well.
“I actually think we could have some positive surprises in the second half,” he said. “As much as people worry about things getting bad, things could actually get better.”
Lee is a long-time bull, who has previously contended that the declines in early 2022 have created excellent entry points for stocks.