Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Fundstrat’s Tom Lee has expressed optimism about the U.S. economy despite the ongoing government shutdown, citing two key factors that could drive investor confidence. AI and Dovish Fed Could Spark Growth In an interview with CNBC on Monday, Lee said massive investments in the artificial intelligence sector and the Federal Reserve’s dovish stance are “powerful tailwinds” for the economy. The Fed’s 9-month ...

There is a huge amounts of news flow this morning, Mark, but let's start by looking ahead to one of the big data points of the day. We're going to be looking at inflation in the form of PII. Now, you do think this is a data point that matters.Give us what you're watching for. Yeah. Good morning, Ana.Normally API gets released after CPI and largely gets dismissed. CPI is the more important component. And since P.I. comes after it, it's kind of, well, we've already got the bigger signal. But this is one of th ...

Investment Rating - The report maintains a neutral asset allocation stance while focusing on diversification across regions and styles [3]. Core Insights - Increased expectations of a more dovish Federal Reserve and de-escalation of geopolitical tensions have created a favorable "Goldilocks" environment for markets, supporting growth pricing across various assets [1][2]. - The report highlights a broad geographical bullish growth repricing, with equities outperforming bonds and cyclicals outperforming defensives [1]. - Consensus EPS revisions have turned less negative recently, with positive revisions noted for the US market, indicating improved expectations for equity fundamentals [2]. Summary by Sections Market Conditions - The report indicates that markets are pricing in a more dovish Fed, with expectations for a rate cut brought forward to September and a reduced terminal rate forecast of 3-3.25% [1][7]. - The labor market data expected this Thursday is deemed critical for sustaining positive momentum, with economists forecasting 85k for non-farm payrolls, below the consensus of +113k [1]. Earnings Outlook - The upcoming Q2 earnings season is highlighted as a key focus, with a relatively low bar for EPS growth set at 4%, down from 12% in Q1, and insights expected on corporate adjustments to increased tariff rates [2]. Asset Allocation - The report suggests that reverse dispersion trades may be attractive as a macro hedge against potential growth deterioration over the summer [2]. - Recommendations include option hedges and specific strategies such as USD HY puts/CDS payers to hedge against stagflationary shocks [6]. Performance Metrics - The report provides forecasts for various asset classes, indicating expected total returns and downside risks for equities and bonds over different time horizons [18]. - The S&P 500 is projected to have a total return of -4.1% over 3 months, with a potential upside of 6.6% over 12 months [18]. Risk Appetite - The report notes a rebound in the Risk Appetite Indicator to 0.3, reflecting increased risk appetite among investors [1][26]. - Implied equity correlations have been falling, indicating expectations of more dispersion in the earnings season and a fading macro risk environment [2][15].

Welcome back. Stocks near some session highs. Every sector currently green except energy led by consumer discretionary this morning.Joining us here at Post9 is Tom Lee, Fundstrat Global Adviserss, head of research and Fundstrat Capital chief investment officer, also a CNBC contributor. Tom, it's good to have you. Welcome.Talk about confounding expectations, wouldn't you say. What do you make of this morning's action. Well, you know, in some ways it's not a surprise because as you know, like Art Cashion had ...