Thomas Lee
, JPMorgan’s chief equity strategist, was asked by CNBC’s Melissa Lee if Cyprus would cause the pullback many strategists are looking for. Lee said he wasn’t sure if Cyprus was enough to cause a pullback, but it would depend on U. S. data weakening.
Lee said the big picture shows a secular bull market underway with at least another four years left. Lee added we are in a major capital goods cycle, something we haven’t seen in 50 years.
Lee stated that small caps were the place to be as his firm believes an up cycle started in November which typically lasts two years. Small caps could outperform the S&P 500 by 2,000 basis points over this timeframe, he added.
If the durable cycle is as strong as we think it is, the market will easily make new highs this year, Lee said.
Lee said the move into consumer staples was justified as they are really steady free cash generators with good pricing power and visibility.
Earlier this year Lee laid out his long-term bullish scenario for the stock market [link].