Tom Lee, who correctly called the stock market rally after June’s softer-than-forecast inflation report, said the S & P 500 could hit a record high soon — on one condition. “Many believe a recession is imminent, and I think earnings season will really give us an idea and we’ll know that in the next couple of weeks,” Lee, founder and head of research at Fundstrat Global Advisors, said Wednesday on CNBC’s ” Closing Bell Overtime. ” “If a recession is not imminent, then I think a lot of folks are offsides and that’s what propels markets to all-time highs.” The earnings season kicks off this week. PepsiCo and Delta Air Lines report Thursday and JPMorgan , Citigroup and Wells Fargo are all due on Friday. Lee believes investors could get clarity from company reports about the strength of the economy. The widely followed strategist had predicted Monday that the S & P 500 might jump 100 points after a lighter-than-expected inflation reading. The call turned out to be spot on as the consumer price index surprised to the downside , sparking a rally Wednesday. “Right now it looks like [the Fed] achieved a soft landing. When they telegraph massive increase in [rate hikes] last year and they were going to be aggressive, businesses got cautious, so we don’t necessarily have companies tripping over themselves, which is what typically creates the recession dynamic,” Lee said. Lee recently raised his year-end S & P 500 target to 4,825, which would put the benchmark at an all-time high. His forecast is also well above the average year-end forecast of 4,227 from Wall Street strategists, according to CNBC Pro’s market strategist survey , which rounds up the top 15 strategists’ predictions. The S & P 500 closed at an all-time high of 4796.56 in early January 2022. The latest inflation reading could give the Federal Reserve some breathing room as it looks to bring down inflation that got as high as a 9% annual rate in June 2022, the highest since the early 1980s. Still, the strategist cautioned about the the risk of inflation creeping up again. “We cannot have inflation linger and burning and flare up again. Fortunately, consumers aren’t expecting that, but I think that the Fed can breathe a little easier, because the economy hasn’t been destroyed,” Lee said.
