- Tom Lee from Fundstrat suggested on CNBC’s “Squawk Box” that despite negative policy news, the market could be bottoming out this week, citing Friday’s rally amid bad news as a positive sign.
- He attributed market choppiness to uncertainties from executive orders, tariffs, and DOGE’s austerity measures, but noted a weak jobs report could prompt Fed rate cuts and White House action to support the economy.
- Lee indicated that stocks rising on bad news, as seen on Friday, along with negative sentiment, might signal a market bottom, though technical analysis suggests more exhaustion is needed.
Tom Lee, Fundstrat co-founder, managing partner, and Fundstrat Capital CIO, joined CNBC’s “Squawk Box” to discuss the latest market trends and various economic factors. Despite the negative news surrounding potential policies, Lee suggested that the market could be bottoming out as early as this week. He attributed the current choppiness in the markets to the uncertainty surrounding the first hundred days of executive orders, tariff threats, and austerity measures from the Department of Government Efficiency (DOGE). Lee noted that businesses are hesitant to act due to this uncertainty, causing markets to sink and momentum to falter. However, he pointed out that Friday’s rally in the face of bad news headlines could be a positive sign.
The moderator questioned whether spending on rebuilding US infrastructure or investing in AI would be preferable to the economic boost from military spending. Lee agreed that he would rather see investments in rebuilding parts of the US. When asked if the market had already seen its lows, Lee indicated that investors would be closely watching the upcoming Friday jobs report. A weak report could initially cause panic, but it might also bring back the prospect of Federal Reserve rate cuts, which could ultimately support the market. He also suggested that the White House would not want the economy to stall, potentially leading to a “Trump put” alongside the “Fed put.”
The moderator pointed out that the bar for Fed rate cuts might be high, as officials have indicated they would look through tariff-related issues. Lee acknowledged this but maintained that a significantly weak jobs report, potentially under a hundred thousand, could force the Fed to reconsider its hawkish stance. Regarding the fundamental and technical backdrop for a market bottom, Lee cited stocks rising on bad news as a key indicator, referencing Friday’s performance. While Fundstrat’s technician, Mark Newton, believes more signs of exhaustion are needed, Lee noted that sentiment has turned negative, suggesting a bottom could be near or may have already occurred.
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