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Tom Lee: Earnings might stink, but markets don't

Earnings are old news, and forward guidance is the real key, Tom Lee, co-founder of equity research firm Fundstrat Global Advisors, said Friday.

First-quarter earnings start to trickle in next week, and they are not looking good thanks to this year's strong dollar and low oil prices.

"I think delivered results are going to stink," Lee told CNBC's "Worldwide Exchange" on Friday. "It's not a surprise we're having an earnings recession."

Lee said he is not expecting anything shocking from earnings. He noted the strong dollar likely took a toll on multinational companies in particular. But investors should look to forward guidance instead as the real bellwether, Lee said,

"It's not what people know. It's what people will be surprised with," he said. "I think they're going to be surprised with the guidance."

Company guidance calculated in December was based on dollar futures, but Lee said he doesn't think sell-side analysts are "great at modeling FX," and foreign exchange has provided a nice surprise for some companies.

"We know companies established guidance this year based on the dollar being strong," Lee said. "The dollar's a lot lower than that forecast, so that's the upside."

Lee is bullish on the U.S. economy amid global risks such as negative interest rates, the yen rallying and pain among European banks.

"If you had to trust one indicator, it's jobless claims," Lee said.

Initial claims for unemployment benefits beat estimates at 267,000 for the week ended April 2. But strong jobs numbers aren't always enough to assuage investors.

"It's really looking like the old bull market, not a bear market," Lee said. "I think that's been the tough thing for investors to really appreciate as bad as the environment's been since mid-2015 to February."

Lee and his team at Fundstrat are telling investors to reconsider dividend stocks and shift their focus away from entire sectors. The banking sector, currently the worst performer in the S&P 500, is one that needs a "catch-up" trade, according to Lee.

"One of the things we've recommended is something called 'stocks are the new bonds,'" Lee said. "About one-fifth of the S&P has a dividend yield above their own bond yield."

Stocks that have dividends such as Cisco, IBM and Qualcomm are examples of what he calls a yield parody strategy, where the dividend yield is above the bond yield.

"Essentially it's the same credit risk. Why are you getting paid 100 basis points more to buy the stock than the bond?" Lee said.