Tune out noise and enjoy bull market: JPM's Lee

Construction boom coming: Pro
Construction boom coming: Pro

JPMorgan Chase's Tom Lee remains one stubborn bull.

Appearing Thursday on CNBC's "Squawk on the Street," the investment bank's chief U.S. equity strategist said that he sees growth picking up in the second half of this year because of pent-up demand, and that a "construction boom" appears imminent.

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Lee added that some corporations have been hoarding capital reserves, and as equipment ages and opportunities to grab market share open up, those companies must either pursue mergers or spend capital to keep up.

Both scenarios mean good things for stocks.

"Investors will actually want to buy value stocks," Lee said. "I think you want to buy things that have smokestacks. You'll want to buy technology. You really want to buy financials here as well, but you still always want to own health care."

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Despite a rocky start to 2014 as Wall Street navigated geopolitical tensions and emerging market selloffs, Lee said he doesn't know why we "should be worried about the short-term noise." He also sees tailwinds from lower oil costs and improving weather, and said investors could even look toward heavily shorted stocks

Just after Lee defended his bullish outlook on CNBC, major U.S. stock market averages took a downward swing, with the Dow dropping 120 points by midday. But as investors worry about nearing the end of the five-year bull market's shelf life, Lee said every bull market that has lasted more than four years ends from a single culprit: a recession.

With modest growth expected this year and employment improving, the U.S. does not seem close to falling into another recession. One measure investors can check to see whether growth could slow to recession-like levels is the long-term yield curve on 10-year Treasury notes and 30-year Treasury bonds, Lee said.

The curve becomes inverted in front of recessions, and markets should have plenty of lead time to prepare, Lee said.

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Investors shouldn't ignore runaway valuations or bubble-like behavior, but Lee said symptoms of a looming recession remain the "most telling bear sign."

"These are things we can't ignore," Lee said. "You don't want to have a market that becomes speculatively frothy. The most important thing for us [are] the signs of a recession. ... Really we should focus on the fact that we're in a bull market."

Bank of America Merrill Lynch's Savita Subramanian echoed Lee's bullish sentiment. She believes the should end the year 10 percent higher, as the economy moves to more solid footing and the winter's frigid weather passes by.

Once the economic data becomes clearer and investors see an improving growth trajectory, U.S. stocks will remain their best bet, said Subramanian, the chief U.S. equity strategist at BofA Merrill Lynch.

Subramanian also sees companies relying more on capital investments, rather that stock buybacks, to stimulate growth and attract investors in the coming months.

"It's less about picking the right asset class and more about picking the right stocks," Subramanian said Thursday on "Squawk on the Street."

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