Tuesday has the makings of a stock market rebound, but it will be difficult to pinpoint the precise catalyst. After two intense sessions, Monday’s somewhat tranquil Wall Street ending gives at least some hope.
Here is today’s positive prediction from Yves Lamoureux, president of market research firm Lamoureux & Co., who is back to discuss the Dow Jones Industrial Average’s (DJIA) projected arrival at 50,000 by 2027. And since the index is currently hovering around 40,000, he is referring to “a hard grind” higher rather than a meltdown.
When the index reaches 50,000, the Montreal-based Lamoureux told MarketWatch, he anticipates a lot of “sideways” volatility and more difficult advancement since he believes the 10-year Treasury rates, BX:TMUBMUSD10Y, would reach 6% to 7%, maybe by 2028. He forecast in March 2022 that by 2024 or 2025, 10-year rates will return to their typical level of 4%.
With conversations that could result in a “different view,” Lamoureux anticipates positive surprises in the wake of the tariff upheaval that is affecting markets in about six months. “As soon as the market can get a bit of clarity, that negotiations, something happens [that’s] positive, the market’s going to pick up and it’s going to go back and continue higher.”
In May 2024, Lamoureux’s prediction that the Dow would hit 40,000 in late 2020 was realized. “When I said 40,000 people were rolling their eyes,” the forecaster remembers.
Last year, he cautioned customers that the market was too indifferent to tariffs:
Additionally, he advised them to begin raising funds in November and December, as this would “give them options,” like funds to purchase equities when the markets began to decline:
Last year, he was also preaching that the Fed had erred by lowering interest rates at a period of increasing stock prices. “They are stoking the flames by slashing while the market is booming. Additionally, we were aware that stocks were already pricey,” he stated.
He believes there is no room for more cuts, although the central bank may be able to make one more 25 basis point cut.
According to Lamoureux, the most recent selloff highlights the need for investors to get better in two key areas: raising money more frequently and scaling in and out of markets. This involves buying or selling little amounts at a time to prevent, for instance, scrambling at the bottom with no money left over.
Individuals have been instructed to remain in the market. It’s incorrect, in my opinion. It’s really cheap now, but you have to accumulate funds over time when it becomes too costly,” he added.
Although there are many companies that appear inexpensive at the moment, he is especially interested in one category: oil producers. “I think they’re going to be great for the next 10 years because oil…is going to see $200,” he stated. And because of concerns about tariff-linked growth, he believes that oil has likely fallen 15% so far this year, bottoming out at about $60.
Following a 3% decline in 2023, the SPDR S&P Oil & Gas Exploration & Production ETF XOP is down 19% this year.
“Oil will go up because of resource depletion,” he asserts. “The depletion of conventional oil in the 1970s and the United States is a similar situation. “I think that shale production, shale gas, and shale oil are peaking, so we will see a depletion,” Lamoureux stated, adding that the same model that predicted conventional oil would peak in the 1970s also predicted shale.
“And as soon as you have less production over demand, it’s a commodity, it exaggerates prices, so I think we will see $200 [on oil].”
Even though he still like robots and artificial intelligence, he claims that many tech stocks are “still very expensive,” making them a risky investment at the moment. “But definitely oil, the oil stocks are so cheap, definitely you nibble if you don’t know what you are doing.”
