On CNBC’s ‘Power Lunch,’ Tom Lee of Fundstrat Global Advisors and Jeff Kilburg of KKM Financial shared their perspectives on the current market dynamics, especially in light of recent market movements and the Federal Reserve’s decisions.
Tom Lee expressed optimism, describing the recent market pullback as another buying opportunity. He noted that despite a painful drop, the fundamentals supporting stocks remain strong, suggesting that investors should look to buy into the market at this point. He pointed out the context of the market bleeding lower over the past ten days, culminating in what he described as a capitulatory moment with a 90% down day and a significant spike in the VIX. Historically, such sharp increases in market volatility have led to quick recoveries, with Lee citing instances where markets regained all losses within a week or a month following similar VIX spikes. He also commented on small caps, suggesting that their recent underperformance does not change the long-term attractiveness due to factors like deregulation and increased deal activity in sectors like biotech and financials.
Jeff Kilburg, while acknowledging the fundamental strengths noted by Lee, adopted a more cautious stance. He emphasized the potential for further valuation adjustments due to high interest rates, upcoming tax, tariff, and deficit issues. Kilburg highlighted the significant move in the VIX as an indicator of market uncertainty but cautioned against solely relying on historical patterns due to the current overvaluation of the top S&P 500 names and the market’s conditioning to expect continuous rises, largely supported by the Fed’s dovish policies and massive balance sheet. He predicted that the market might see more volatility and a reset in valuations over the coming months rather than days, suggesting that while he sees potential in the market for 2025, the immediate term might be turbulent due to the recent “depth charge” effect on market confidence.
The discussion underscored a divergence in immediate market strategy: Lee advocated for capitalizing on dips with an eye on long-term growth, particularly in small caps, while Kilburg advised patience, waiting for a more substantial correction or stabilization before fully committing investment capital. Both analysts, however, recognized the market’s resilience and potential for recovery, albeit with different timelines and risk assessments.
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