Fundstrat’s Tom Lee says the inventory market is headed for an “abrupt change of market circumstances” later this yr, at the same time as he believes present circumstances stay favorable for shares.
Lee made the feedback in a CNBC interview following the Federal Reserve’s June 17 assembly, the place new Fed Chair Kevin Warsh held his first press convention and dropped the central financial institution’s ahead steerage on rates of interest.
Based on Lee:
“We nonetheless imagine later this yr there may be going to be an abrupt change of market circumstances, one which feels very very similar to a bear market. However we don’t need to stand and name a high. I believe circumstances are nonetheless favorable for shares.”
Lee mentioned the S&P 500 sits at 7,500 and pointed to the SpaceX IPO as an indication that threat urge for food stays intact, noting the corporate has a float of simply $90 billion.
He outlines three forces he expects to check markets later within the yr: scrutiny tied to the Fed’s new five-task-force overview course of, further share unlocks from the SpaceX, Anthropic and OpenAI IPOs, and provide chain shortages stemming from disruptions within the Strait of Hormuz.
A fourth catalyst, Lee says, can be speculative capital working dry, evidenced by stretched margin debt or a rush of money to the sidelines.
Lee says he doesn’t see indicators that buyers are bullish sufficient but for that fourth situation to be in place.
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