US Markets

JPM's Lee: Why this is not 'a mature bull market'

Overall economic tone is good: Strategist
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Overall economic tone is good: Strategist

Ultralow borrowing costs. Pent-up demand. Aging infrastructure. Record consumer wealth levels. JPMorgan Chase's Tom Lee has a long list of reasons to remain bullish on stocks this year.

"To me it's really a formula for stocks to do quite well because it's going to be a story about earnings surprise for the next few years," Lee said Monday on "Squawk on the Street."

Lee, the chief U.S. equity strategist for JPMorgan, said that one big reason for remaining optimistic was also something that could "transform the character of investing": an influx of retail investors. The longtime stock market bull discounted fears that an increase in retail investors portends a looming stock market decline.

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"I still think we're just in the middle innings of a bull market," Lee told CNBC. "The retail investor will ultimately provide a lot of support for stocks. It's really going to transform the character of investing. ... You can look at many decades of data, but the retail investor is not generally coming in at the top. But they're going to come in midcycle. ... I don't think this is at all a mature bull market."

Monday was a good day to share Lee's optimism. The Dow rose just under 180 points by 1:30 p.m., and the reached a record high at 1,858 points. Adding to the bull case for stocks, Goldman Sachs' chief U.S. equity strategist, David Kostin, told CNBC on Monday that the S&P had plenty of room to run. He believes the index with hit 1,900 this year.

Capex spending will continue: Strategist
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Capex spending will continue: Strategist

Lee's and Kostin's bullish calls contrasted sharply with concerns over the recent rounds of weaker-than-expected economic data that some attribute to this winter's frigid weather. The optimism also suggested a turnaround from the volatile start to 2014, when worries over emerging markets and the U.S. Federal Reserve's plans to taper roiled global markets.

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Goldman Sachs predicted a 10 percent correction in the stock market in 2014, on course to modest gains by year's end. Kostin was careful not to say the worst was over after January's 6 percent pullback.

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"That's certainly a modest correction," Kostin said during an earlier appearance on "Squawk on the Street." "Statistically we would expect something like a 10 percent drawdown over the course of this year. We had 6 percent already. ... Some of the weather-related issues complicated what's likely to be a pretty rocky earnings season in the first quarter. We'll get those numbers in April or May."

Kostin said capital expenditures will also help drive modest gains in the stock market this year, estimating 8 percent growth in that area this year, compared with 2 percent in 2013. Lee also identified the large cash reserves held by several corporations as a reason for optimism, and Barclays strategist Barry Knapp called capital spending the "sweet spot" for investing for this year and perhaps longer.

"It looks like all those waves of public policy uncertainty we had in 2010, 2011 and 2012 have really dissipated, and it's just set the stage for much less corporate risk aversion," Knapp said.

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."

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