Tariffs Can Send The S&P 500 To 6,000

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Transcript:

[00:00:04] Doug McIntyre: So, Lee, we’ve got a market that’s been beaten up by worries about, tech stocks and tariffs.

[00:00:13] Doug McIntyre: Now the tech stocks have all announced they were a mixed bag. It’s fine. One or two of ’em did. Well, one or two of didn’t. That leaves tariffs on the table, right as the game changer. For stocks. Now, what happens if the Trump administration sort of gets all this cleaned up in 90 days, has deals with all the really big governments?

[00:00:38] Doug McIntyre: What happens to stock market?

[00:00:40] Lee Jackson: we did have a massively high velocity sell off that took the market down into bear market territory, which is down over 20% Now. We’ve recovered a lot of that already. I think the NASDAQ’s down 8%.

[00:00:55] Doug McIntyre: I think that’s about right.

[00:00:57] Lee Jackson: Yeah. So now if, immediate deals were signed or Trump could basically say, or the administration could say, we’ve signed a deal with Japan, China. India, the biggest players we could probably tack on in 20% to this, maybe a 20% rally from here. But the bottom line is the market was way, way overbought when things started to roll over in February.

[00:01:23] Lee Jackson: Way overbought. And it’s still expensive. I mean, the trailing earnings, price to earnings on the S&P is probably still 24, 25. And that’s above historical. Yeah, it’s, it’s,

[00:01:35] Doug McIntyre: I can, I can tell you something. I can see it rallying back to 6,000.

[00:01:41] Lee Jackson: Yes. I think that would be the top. That would be the top end, and that’s what, 10% from here? Something like that.

[00:01:48] Doug McIntyre: Yeah. But, but look, I’m saying if, if, let’s say the tariff news is positive, what you’re saying is, is that there is a cap on it because of the way that people look at a market through the P/E lens, but Right. that would get you to what, 27 or 28 if you were at a 10% rally

[00:02:08] Lee Jackson: Oh, oh times earnings? Yeah. Easily,

[00:02:11] Doug McIntyre: if not higher. That’s, that’s expensive. But I’m gonna predict if, if you’re interested in buying the S&P, all right. I think as a, as a holder of the S&P 500, you, you are gonna rally to around 6,000 if the tariff problem is solved. Right. And it’s solved in a way that’s not negative. I mean, you could solve it in a way that, oh yeah, we’re all gonna have 125% tariffs.

[00:02:37] Doug McIntyre: We shook hands on it. We didn’t love it. But that’s what we’re gonna do. If you’ve got an economically viable solution to the tariff problems, as far as I’m concerned, you’re looking, you’re looking at 6,000.

[00:02:48] Lee Jackson: Yeah. I, don’t think that’s out, out of the question. And most people, it, it is weird when you look at, of course, they all, that, all of the numbers that the major investment banks on Wall Street put out in January.

[00:03:00] Lee Jackson: Of course, they’ve all been adjusted to account for, tariffs, et cetera. They’re as best they can, but yeah, that’s a reasonable synopsis. The thing that’s hard to measure in, in this day and age is how much of this is just fast money computer algo trading that just goes up. Yeah, I know that it, it, it’s all always those, those CTA orders are always logged in at buy and sell levels, on futures contracts or the EMini or whatever.

[00:03:33] Lee Jackson: they’re not trading, individual issues as much. But the question is, and the so-called big money, the, the big investment banks, they’ve been shorting, shorting, shorting. Still. So, I mean, that’s one of the reasons we had such a quick runback is, is, they had to cover their shorts anytime something positive on the tape.

[00:03:56] Lee Jackson: They’re covering their shorts. So is is, and retail buying has been more resilient than it has been in years because they got, when you had two years of just buy the dip, that’s a hard habit to break.