Buybacks have gotten a bad rap from both Republicans and Democrats. But stocks would be trading at a massive discount without them.Marketsread more
Fiat Chrysler and France's Renault could soon partner up to take on the sweeping changes to the global auto industry, according to a report in the Financial Times. The...Autosread more
Microsoft shares have gained 133% since November 2015, outperforming a tech "basket of unicorns" over that stretch.Technologyread more
The president's state visit comes amid tensions with carmaker Toyota over potential auto tariffs. Trump has repeatedly threatened Japanese and European carmakers with tariffs.Traderead more
When commercial real estate investor Manny Khoshbin spent $2.2 million on the fastest production car in the world, he had no idea it would very quickly also become the...Autosread more
The IRS is about to release a new draft of Form W-4, which will more closely reflect the changes stemming from the Tax Cuts and Jobs Act. For workers, that means they'll need...Personal Financeread more
The Mega Millions jackpot has spilled over $400 million. It would be the ninth largest winning since the game began in 2002.Personal Financeread more
Trump was speaking at a meeting of Japanese business leaders in Tokyo during his state visit to Japan on Saturday.Marketsread more
The biggest U.S. gasoline price surge in years is running out of steam just in time for the start of the summer driving season.Energyread more
The federal minimum wage has remained $7.25 per hour since 2009. But several states, and even some companies, have since taken matters into their own hands to pay employees a...Workread more
Stocks rose on Friday, but notched weekly losses as investors worried the U.S.-China trade war is hurting economic growth.US Marketsread more
It's been a tough start to the fourth quarter for U.S. equities. But after an autopsy of trading in October, Fundstrat's Tom Lee said the pullback looks more like a changing of leaders and laggards than a reason to sell.
"A few anomalies about this sell-off suggest a regime shift is potentially behind the violence of the market moves, as opposed to this being a 'equities are peaking' sell-off, and further affirms our take that this is a pullback that needs to be bought," Lee said in a note to clients.
For one, Lee pointed out that energy, financials, real estate, health care, and staples and utilities, which have mostly under-performed this year, are actually leading. Over the past 8 days, value has outperformed by a "whopping" 150 basis points, Lee said.
"Doesn't this feel more like a 'laggard becomes a leader' trade?" Lee, former chief equity strategist at J.P. Morgan, wrote in the note. "Perhaps the best place to start is to look at the 'musical chairs' taking place at the style and sector level."
Lee highlighted the steepening yield curve as a sign of improved forward growth outlook and an inverse relationship of ETF volumes to volatility products. The combined inverse volatility to ETF relationship was at 6 percent on the New York Stock Exchange Thursday, which Lee said matches the February reading and is a "sign of a bottom."
The Dow's 1,300-point sell-off this week was fueled by the idea that rising rates are bad for the economy, by trade tensions, by late-cycle fears — or, as Lee said, "earnings are as good as it gets" — and some overall market fatigue. Stocks recovered on Friday, though, as tech shares rebounded and those rates fears subsided. Better-than-expected bank earnings also helped boost the Dow Jones Industrial Average more than 270 points but it still ended the week down 4 percent.
To be sure, Lee said there is a risk that markets will get nervous with a 10-year Treasury yield above 3.25 percent.
"Equity markets generally saw corrections when interest rates touch the long-term downtrend in place since 1980 and that trendline today is 3.25 percent," he said. "But we believe we are in a reflationary environment, more akin to 1945-1980, and hence, rising rates tend to be associated with rising stock prices."
Bottom line, Fundstrat is a "slow buyer" of the pullback. The firm is betting that strong seasonals will be dominant in 2018, meaning stocks will rise both from earnings season, "even if guidance is not spectacular," and from post-midterm rally.
"While markets globally are retracing, we believe the risk-on trade will be US equities," Lee said. "The US has the best visibility and pro-growth administration and policies. Hence, we see US equities as the high-quality safety trade for global investors."