“I think the S&P and the Dow in five years will actually double,” Fundstrat’s Tom Lee said.
Lee told Bloomberg’s Tom Keene on Friday that he expects earnings on the S&P 500 to peak near $US190 per share from around $US120 today.
He expects earnings growth to be accelerated by a pick up in investment spending, a theme that many economists have been forecasting.
In recent weeks, volatility has spiked in the markets, bringing the S&P 500 down from 2,019 on September, 19 to 1,862 when Lee spoke to Keene.
A doubling of the S&P 500 means Lee expects it to top out at north of 3,700. That’s even more bullish than the long-term bullish calls recently offered by Morgan Stanley’s Adam Parker and RBC’s Jonathan Golub.
Lee does recognise there are risks out there.
“What could go wrong?” he asked rhetorically in a note to clients on Friday. “In our view, we believe the greatest risk is a spillover into the global economy from the recent financial market dislocations. That is, an unwind of carry trades result in higher Euro-area funding costs then transmitted to US banks as financial stress. However, the offset remains supportive Central Banks that are closely watching. “