Market Boost Ahead as $7 Trillion in Cash Poised to Enter

Tom Yeung brings you your Sunday Digest.

In the 1990s, my father moved our family into a new “Florida-style” housing development. The land was affordable, and the house was reasonably priced for our needs. Initially, he questioned his decision as home prices remained stagnant, much like the water in the swampy backyard.

Then came the catalyst: local government upgraded the four-lane road outside our neighborhood to a major highway.

Once that change occurred, everything transformed rapidly. Waterways were redirected, shopping malls sprang up nearby, and more homes appeared. Suddenly, our property skyrocketed in value.

Catalysts like these play a crucial role in investing. Regional banks and biotech firms may hover at low levels for years, only to surge dramatically on news like takeover offers. Similarly, falling stocks may only stabilize with a well-timed positive catalyst.

InvestorPlace Hypergrowth Specialist Luke Lango believes he has pinpointed a new catalyst that could reshape the market.

He asserts that an upcoming event on May 7 is poised to trigger significant market movements. While I can’t divulge all the details in this Digest, Luke will address these specifics at his 2025 Summer Panic Summit on Thursday, May 1, at 7 p.m. Eastern. Reserve your spot now.

Ultimately, a company’s fundamental value is the best measure of its worth. A catalyst isn’t enough to sustain stock prices on its own.

However, achieving that value often requires the right push. Considering this, let’s examine three companies poised for opportunity as we approach the game-changing May 7 catalyst.

Built for the Storm

Previously, I discussed CME Group Inc. (CME), a financial exchange that typically thrives during rising markets and periods of volatility. This Chicago-based exchange has exclusive licenses for futures contracts on the S&P 500, Russell 2000, and Nasdaq indexes. Astonishingly, over 95% of U.S. interest-rate futures are traded on CME’s platform.

Professional traders depend on CME’s products to manage risk effectively.

As anticipated, the past few months have proven lucrative for CME Group. On April 23, the company reported a 10% increase in revenue to $1.6 billion, while earnings per share rose 12% to $2.80. Shares climbed 12% since that recommendation, contrasting with a 10% decline in the S&P 500.

Expect further gains for CME in the next month, especially given its moderate price reaction to first-quarter earnings. Volatility has surged, driven by uncertainties from President Trump’s “Liberation Day” tariffs, propelling trading volumes on the CME exchange to near-record highs. April’s daily traded volumes averaged 40 million contracts, compared to 29.8 million in the first quarter and 7.8 million in 2024.

Continued volatility is likely, as Trump has yet to finalize trade deals with 75 countries.

The Taxman Cometh

Heading into 2025, taxes are expected to remain a hot topic. President Trump’s 2017 Tax Cuts and Jobs Act (TCJA) expires this year, prompting Congress to propose a replacement. As noted in December when I named Intuit Inc. (INTU) my No. 5 pick for 2025:

Tax changes for 2025 should stimulate growth. The incoming president has indicated plans for substantial reforms, including tariffs and tax adjustments. This environment will be advantageous for companies like Intuit, which saw a comparable boost during Trump’s first term, with shares rising 38% in his first year. New policies may lead to innovative tax avoidance strategies.

Since that recommendation, Intuit’s shares have only decreased by 4%, whereas the Nasdaq-100 index fell 13%.

Another breakout moment for Intuit is on the horizon. Historically, the firm’s shares have increased by an average of 10% from May to July. This trend often surprises markets, especially since TurboTax performs well during peak tax season. Recent discussions in Washington about extending the TCJA will likely contribute to rising demand.

Trading at a reasonable 30X forward earnings—15% below its five-year average of 35X—Intuit stands to benefit significantly from potential changes in tax codes.

A Conservative Play

Finally, several banks appear to be attractive investments during this environment.

The standout option is U.S. Bancorp (USB).

Known for its stability, this Minneapolis-based bank boasts strong profits, efficient cost management, and conservative lending practices. During the financial crisis, net charge-offs only peaked at 2.5%, well below the 3% rates of competitors. Its cyclical midpoint return on equity (ROE) stands at 13%, significantly higher than the industry median.

Such quality comes with a premium price. Historically, shares have traded about 1.8X price-to-book value since 2005, while price-to-earnings ratios sit in the low teens.

However, recent recession fears have driven shares to atypically low levels. As illustrated in the following overview, USB has dipped below the 1.0X price-to-book mark only three times in the past two decades:

• 2008: The Global Financial Crisis
• 2020: The Covid-19 Pandemic
• 2023: The U.S. Regional Banking Crisis

Potential for Stock Recovery: U.S. Bancorp’s Upside Opportunities

Recent trends indicate an opportunity for certain stocks, notably U.S. Bancorp (USB). In his upcoming presentation on Thursday, May 1, Luke Lango anticipates that USB could experience a “V”-shaped recovery, similar to the rebound seen in 2009. This projection suggests that USB’s multiples could return to the range of 1.25X to 1.5X, which represents a potential upside of 25% to 50%.

Investors should keep in mind that USB’s traditionally conservative nature might cap its upside at 50%. Unlike high-risk bets such as Moderna Inc. (MRNA), USB offers stability for conservative investors seeking reliable returns. It is a solid option for those looking to complement higher-risk investments with reliable choices.

The Current Investment Climate

Unique investment stories—like those involving significant real estate purchases—are rare. Housing prices generally rise slowly, except for notable exceptions like New York City in 1975 or Florida in 1990.

Similarly, substantial gains in stocks, such as 2X, 5X, or even 10X returns, are infrequent. However, Luke Lango identifies a new catalyst that may create a similar surge to the gains experienced during the 1997 internet boom.

Currently, investors are holding an unprecedented $7 trillion in cash, poised for market entry. Notably, private equity funds alone are managing about $2.62 trillion, as reported by S&P Global Market Intelligence.

This significant cash reserve suggests a substantial influx into the stock market could occur this summer.

To navigate these developments, Luke is hosting an urgent online strategy session on Thursday, May 1, at 7 p.m. Eastern. He will discuss strategies to protect portfolios during the summer and potentially achieve triple-digit gains in the coming years. In addition, he will reveal seven prime investment opportunities amid this potentially pivotal summer.

Until next week,

Tom Yeung

Market Analyst, InvestorPlace.com