Here’s the $ 4.5 trillion ‘firepower’ that will drive stocks higher in April, says top strategist


A new month has gotten off to a bullish start, or so it seems, as equity futures rally after a better-than-expected gain of 916,000 jobs in March Friday, underpinning investors’ hopes of a strong rally. post-COVID-19.

When it comes to the data, there’s a lot to like, according to Tim Duy, chief US economist at SGH Macro Advisors.

“Assuming the pandemic is only under greater control this year, I suspect that a substantial impediment that will limit the pace of job growth this year will be the rate at which companies can hire employees. Firing is easier than hiring and employers are now struggling to add workers, ”Duy told clients in a note.

So be on the lookout for those “we can’t hire workers” stories, he says.

In our call of the day from Fundstrat Global Advisors founder Thomas Lee, who says the “face ripper” rally he predicted recently shows no signs of improving. And there is a $ 4.5 trillion reason to believe the earnings will hold in April, he told clients.

Aside from the positives that already exist for this market, a strong economy and the launch of vaccines, Lee is targeting a lot of institutional money on the sidelines, with cash balances of $ 3 trillion, the highest since June 2020. That it is against $ 2.764 billion at the beginning. from 2021, a “dramatic” gain of 9% or $ 241 billion, Lee said.

A cautious stance on the part of institutions that went “parabolic” in the last half of March, adds to the 1.5 trillion dollars in cash of the retail money market.

“Total cash on the sidelines is $ 4.5 trillion = tons and tons of firepower on the sidelines. This bodes well for April’s equity gains, ”Lee said.

Lee expects small caps, energy and cyclicals, geared toward an economic recovery, to continue to lead in the second quarter.

“Remember that cyclicals are only 33% of the S&P 500 SPX,
+ 1.18%
total weight and more than 60% of the Russell 2000 RUT index,
.
So if Cyclicals, also known as Epicenter, works, small-cap stocks will perform better, ”he said.

Look at this graph

Adam Kobeissi, founder and editor-in-chief of The Kobeissi Letter, expects the bullish jobs report to send the S&P 500 to 4,035 to 4,050 in the near term, but from there he would like to see it slide back to 3,950 to 4,000, to set for another higher low before a move towards 4,100.

Kobeissi’s letter

“Therefore, we remain on the sidelines to start this week, as facing such a strong market is not a position we want to take, and we will maintain a medium-term bullish outlook with the intention of returning to our bullish positions. in the wake of a market crash, ”Kobeissi told subscribers.

Facing the public, Dow Jones Industrial Average YM00,
+ 0.74%
futures rose 200 points and the S&P 500 ES00,
+ 0.58%
and Nasdaq-100 NQ00 futures,
+ 0.50%
they increased 0.5% and 0.4%, respectively. European markets are closed for an extended Easter break, and most of Asia was closed as well. The performance of the TMUBMUSD10Y at 10 years,
1,727%
note remained stable at 1.72%. The following data includes the Institute for Supply Management March Service Index and February factory orders.

Oil prices CL00,
-2.02%
they are falling after last week’s decision by the Organization of the Petroleum Exporting Countries and its allies to boost production, and after Saudi Arabia reportedly raised prices for Asian customers.

Shares of electric car maker Tesla TSLA,
-0.93%
they are up 6% in the pre-market phase. Tesla said Friday that first-quarter deliveries totaled 185,000 cars, beating Wall Street forecasts. Wedbush updated Tesla to beat it from neutral and set a new price target of $ 1,000, up from the previous $ 950.

GameStop GME,
+ 0.86%
The shares fell 10% after the gaming retailer and one of the popular meme stocks of the year said they will sell up to 3.5 million in common stock.

South Korean electronics giant LG 066570,
-2.52%
is exiting the smartphone market.

Delta Air Lines DAL,
+ 1.14%
had to cancel 100 flights on Sunday due to staff shortages and will open the middle seats earlier than expected.

The UK government plans to offer everyone in the country two free virus tests a week. Shares in India IN: 1 fell 2% as daily COVID-19 cases hit 100,000, the second country to see that level of cases after the US.

A bitcoin revolution is taking place and MarketWatch is gathering a cast of crypto experts to explain what it all means. Sign up! Bitcoin BTCUSD,
-0.13%,
for the case, it remains stable at $ 57,422

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