- Tom Lee of Fundstrat Global Advisors sees yesterday’s rally, spurred by Trump’s 90-day tariff pause, as a sign of the “Trump put” returning, with high-beta stocks and the ‘Mag Seven,’ like Tesla, showing resilience despite technical damage from earlier washout conditions.
- While cautious about an impaired upside due to the Fed’s inflation-focused stance and unpredictable White House policy, Lee believes the revised tariff ceiling could ease pressure on U.S. companies, potentially extending the rally.
- Lee predicts that higher import costs will drive innovation in AI and automation, boosting tech over the next 12 months, though job losses on Main Street could temper the benefits of these policies.
Tom Lee, co-founder and head of research at Fundstrat Global Advisors, appeared on CNBC to unpack the market’s dramatic response to President Donald Trump’s 90-day tariff pause, framing yesterday’s rally as a signal that the so-called “Trump put” has returned, albeit in an unpredictable form. Reflecting on the historic washout conditions that gripped markets earlier this week, with forced liquidation and panic buying driving an extraordinary one-day surge, Lee noted that trading volumes hit rare extremes, echoing the technical damage seen in past bear markets. Despite this, he remains cautiously optimistic, pointing to the resilience of high-beta stocks and the Magnificent Seven – which Lee thinks bottomed out on Monday – as evidence that the rally could extend further, even as equities pulled back from session lows during the interview.
Lee’s bullish outlook, tempered by recent volatility, hinges on a nuanced view of fundamentals and policy uncertainty, as he argued that the tariff reprieve, capping rates at a revised level for 90 days, softens the blow to U.S. companies more than initially feared. He highlighted that while the Federal Reserve’s reluctance to activate its own “put” until inflation clarifies limits upside potential, the White House’s flexibility – demonstrated by Trump’s pause – offers a different kind of backstop, one driven by instinct rather than a predictable threshold. This “blunt instrument,” as Lee described it, lacks the Fed’s clear reaction function, but he believes it could still pave the way for concessions that benefit U.S. firms, reducing the growth-dampening impact of tariffs and fostering a ceiling that might improve over time.
The discussion also turned to the broader implications for innovation and technology, with Lee asserting that higher import costs will spur U.S. companies to lean heavily into AI and automation to offset expenses, a trend he sees as a boon for the tech sector over the next 12 months. While acknowledging the risk of job losses on Main Street as a potential stabilizer – or even a counterweight to pro-business policies – Lee emphasized that the market’s “washed out” state has created opportunities, particularly in the Mag Seven, which weathered Wednesday’s lows and led the rally. Though he conceded that the road ahead for stocks remains challenging, with the upside case impaired by Fed caution and tariff overhang, Lee’s focus on tech resilience and corporate adaptability underscores his belief that yesterday’s relief rally marks a turning point, not just a fleeting bounce in a bearish landscape.
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