We see a decent probability that June is a positive month for stocks, supported by favorable economic and inflation data, as well as light/pessimistic positioning and sentiment.
At this time we are most comfortable sticking with what is working, such as AI-related names, GLP-1/Ozempic, cyclicals (like financials & industrials), and small-caps.
Some historical perspective, since 1927, when the first quarter is up and April is down, June has been up 11 of 11 times with a median gain of 3.9% (source: Bloomberg). This implies 5,500 for S&P 500. Thus, the base case is positive. As noted previously, the fundamental backdrop is similarly positive, given the softening inflation and jobs data.
Here are 7 reasons to remain bullish on stock markets:
- Too much pessimism out there.
- Six trillion dollars sitting in cash.
- Gives investors the ability to buy in to a rising market or a falling market. Both constructive.
- Goldilocks Environment, not too hot—not too cold: inflation is cooling, interest rates have trending lower, and economic growth is stable
- Earnings Per Share shows A.I. spending / transformation is strong
- Gross Domestic Product remains in growth mode.
- Election Year. Historically, the median S&P performance in a presidential election year is better than a typical year.
- US Exceptionalism. US remains the safest and strongest place to put your money.
While there are no guarantees, we like the economic back drop combined with favorable historical context around markets at this time.
Please reach out to your Channel Wealth advisor if you have any questions or would like more information.
