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

A new month is off to a bullish start, or so it seems, as equity futures rally after Friday’s better-than-expected gain of 916,000 jobs in March, supporting 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. To 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 by institutions that went “parabolic” in the last half of March, adds to the $ 1.5 trillion in cash on 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.

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Lee expects small-cap, energy and cyclical stocks, 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% of the 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 chart 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 recede to 3,950 to 4,000 , to set 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. Going to the open, Dow Jones Industrial Average YM00 futures, + 0.72% were up 200 points and S&P 500 ES00 futures, + 0.59% and Nasdaq-100 NQ00, + 0.45% were up 0, 5% and 0.4%, respectively. European markets are closed for an extended Easter break, and most of Asia was closed as well. The yield on the 10-year TMUBMUSD10Y note, 1.727%, remained stable at 1.72%. The data below includes the Institute for Supply Management March Service Index and February factory orders. CL00 oil prices, -1.74% 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 customers Asians. Shares of electric car maker Tesla TSLA, down -0.93%, were up 6% pre-market. 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, shares of + 0.86% fell 10% after the game retailer and one of the popular meme stocks of the year said it will sell up to 3.5 million in common shares. 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 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 underway and MarketWatch is rallying. a cast of crypto experts to explain all medium. Sign up! Bitcoin, for that matter, is holding steady at $ 57,422 Random reads Redditors unleash the trends we hate Soviet-era TV version of “The Lord of the Rings” rediscovered after 30 years: “The Lord of the Rings “. Need to Know starts early and updates until the opening bell, but sign up here to receive it once in your email box. The e-mailed version will ship at approximately 7:30 am ET. Do you want more for the next day? Sign up for The Barron’s Daily, a morning investor briefing, featuring exclusive commentary from the Barron’s and MarketWatch writers