“Housing is going to look vastly improved six months from now,” Lee, the New York-based chief U.S. equity strategist at JPMorgan, said in a Bloomberg Television interview. He reiterated his forecast that the Standard & Poor’s 500 Index already reached its low for the year and should climb to 1,475 by the end of 2011.
Work began on fewer homes last month than economists forecast, figures from the Commerce Department showed yesterday. Building permits, a sign of future construction, also decreased. While that damp investors’ optimism about the economic recovery, helping push the S&P 500 down as much as 0.8 percent yesterday, Lee said that starts aren’t the key gauge for a read on the housing recovery.
“You’re never going to have a robust move in markets when all the tea leaves are lined up,” Lee said in the interview. “What’s really much more important to housing is not starts right now, it’s really credit creation. In other words are banks easing? And we know banks are easing.”
While the benchmark gauge for U.S. equities may see “congestion” starting in July, he said there won’t be a 10 percent correction this year. The S&P 500 has climbed 6.6 percent to 1,340.68 so far this year and an increase to Lee’s 1,475 would add another 10 percent.
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