US Markets

Expect a global equity rally this year: Tom Lee

Market intact after February: Tom Lee

The fact that European stocks have outperformed U.S. equities this year is not a sign of weakness in American markets, Tom Lee told CNBC on Monday.

Instead, strength in Europe should provide a tail wind to investment in U.S. stocks, the Fundstrat Global Advisors founder said.

"I think it's very bullish that Europe is rallying," he said in a "Squawk on the Street" interview. "I think it doesn't mean the U.S. won't rally. I think this is a global equity rally this year."

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Investors should remember that European equities are much more like exporters, and companies there tend to function like multinationals. He said European businesses are sensing better growth in the United States.

France's CAC and Germany's DAX were up 7.54 percent and 6.61 percent, respectively, in February, while the S&P 500 rose 5.49 percent and the Dow Jones industrial average jumped 5.64 percent.

The FTSE 100 was only up 2.92 percent in February, but it has outperformed U.S. indexes year to date.

The Nasdaq surged 7.08 percent in February. It has gained 4.8 percent this year, trailing behind German, French and British markets.

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As for when the current six-year bull market will lose steam, Lee pointed to two preconditions that marked the downturn in three similar long-lasting rallies.

First, the long-term bond yield curve inverted, meaning markets entered a period where long-term debt had a lower yield than short-term debt. Today, it is still positive at about 60 basis points.

Second, investment spending as a percentage of gross domestic product reached 27 percent. Currently, investment outlays stand at about 23 percent of GDP, leaving about $600 billion of spending in the pipeline, he said.

"I think there's still longevity in this bull market," Lee said.