원문 보기
a 75% chance of an October hike. This jobs report has been softer. Um, we get an inflation report in 2 weeks for September. It does, in our view, we believe there's these one-offs rolling off. And so, I think there's over the next 6 months softer readings on inflation, and that allows not only the Fed to kind of walk back from its hawkishness, but I think it's going to allow bond yields to actually sort of normalize because the the inflation sort of uncertainty starts to ease.
And I think there's a lot of clues cuz I think tech stocks making new highs and crypto doing so well, these can't do well in the face of tightening monetary conditions. So I think that they're anticipating easier financial conditions ahead. So you're reading the tea leaves in in different uh markets for what's going on.
That would be significant. So you you think what when you said yields will normalize. Okay. So the market was braced for the worst and that's the part you need to hold on to. three hikes priced in a 75% chance of one in October and then last week's jobs report came in softer. Lee says there's an inflation report in 2 weeks and he expects softer readings over the next 6 months as one-off items roll off.
Now, here's what I keep coming back to. He didn't just say stocks look good. He said crypto doing well is a clue. His point is that these assets can't do well while conditions tighten. So, they're pricing something in. That's a big claim and it comes with numbers, a yield level he's watching, earnings growth that in his words many people would find hard to believe and a specific window where he thinks a draw down could still hit with the midterms about 28 days away.
Let's get into it. By markets is really uh positive for risk on and I mean I think there's a good chance in the next 6 months we're going to see yields below 5%. You also are looking before the end of the year for maybe as much as 9% higher on the S&P. So you got maybe 80 time, but even Q3 earnings are probably going to come in at almost 30% growth.
And PE, sorry, EPS revisions from the start of this year to now for 2027 earnings are up more than 20%. And the S&P is not even up 20%. So the the multiple actually has come down. If someone is thinking the market was expensive at the start of the year, it's actually gotten cheaper. Uh, and then I think that ironically oil prices being high because the US is an exporter is actually strengthening the US economy.
So I I I know it's a very complex situation, but to me I think there's excessive pessimism because not only is the earnings visibility good, but we're also getting leadership from the stocks that anticipate weaker inflation, which is tech and, you know, crypto. You also uh I think are ready at any time for a draw down that that could still come and you've been talking about that for a while.
In fact, pause on that for a second. Two things stand out. First, the yield. Lee says the 10-year was at 4.75% before Jackson Hole and he thinks anything under 5% gets read by markets as positive for risk on. He also says there's a good chance of yields below 5% within 6 months. That's a specific line you can actually watch.
Second, earnings. He says Q3 growth could come in at almost 30%. He also says 2027 earnings estimates are up more than 20% this year, while the S&P isn't up 20%. So, the multiple has come down. His conclusion is that people are being too pessimistic. Here's the honest caveat, though. Crypto doesn't have earnings in that data.
Lee is using it as a signal of what markets expect from financial conditions, not as something he values on a P/E P multiple. Keep those two things separate. Now, the part that matters most if you're managing risk. When could this go wrong? Lee has a window and he was careful about how firmly to state it.
Let's hear it. And if this kind of breakdown helps you, subscribe. We cover calls like this the day they land. Risk on signal for markets regardless of outcome. And since June 30th, I think the markets have been tough. So part of me thinks we've had a rolling correction and that's, you know, we've had a lot of different groups in a draw down.
But as far as a bigger draw down of markets, I'm still kind of holding a view that from mid-occtober to midterms is where speed bump could happen. I'm kind of reluctant to sort of be that declarative just because sentiment's been negative. And I think when people are bearish, it's hard for markets to be over their skis because we know people are actually speaking with their sentiment and staying cautious.
That's the one thing that always uh that never changes, does it? when things are staring you in the face that are that are negative or scary that don't stall because of midterms with the idea that Democrats don't support data centers and they don't support clarity act but our country and take is that after midterms the Democrats are going to start supporting data centers and clarity act because one data centers are generally providing a lot of economic benefits to the community and clarity act had many democratic supporters so I I think the AI stocks are going to benefit post midterms because you know the change in Congress is not is actually going to sort of greenlight some projects.
So here's where we land. One, the market was braced for a very hawkish Fed and a softer jobs report started to change that. The next test is the inflation report Lee says is coming in 2 weeks. Two, his yield marker is 5%. Under it, he says markets read risk on and he thinks there's a good chance we get there within 6 months.
three, the risk window. He's holding the view that mid-occtober to the midterms on November 3rd, 2026 is where a speed bump could happen, but he's reluctant to be declarative because when sentiment is this negative, markets struggle to get ahead of themselves. That's his reasoning and it's worth sitting with.
Four, the Clarity Act. Lee says AI stocks and crypto stalled over midterm fears, but he expects Democrats to start supporting it afterward. The clip cuts off right there, so I can't tell you how he finished that thought. One more thing, he gave no Bitcoin price target. Anyone telling you he did is guessing.
This is not financial advice, so do your own work. If you want the next one the day it drops, subscribe and turn on notifications. See you in the next video. 200 maybe 80 400 and you you call the current market which I think once again you're you're you go so against conventional thinking all the time you think this market is a coiled spring ready to go much higher almost like it's been held back even though most people would think that it's sort of out over its skis being boosted only by AI.
Uh yeah, I think we are in an unprecedented time because earnings growth is accelerating. Something that many people would find hard to believe in their life. There's at one point you thought even a six handle on the S&P was possible before the end of the year and then a move back to maybe the high sevens or eights on the S&P.
So that would be a midterm uh sort of a freakout or what what what would cause that? We do have the midterms getting closer and closer. I think it's what is it? It was 35 days. Did we Is it another week pass by? Is it Is it 28? That's a zombie movie. 20 another 28 days. Is it Is it only about 28 days away?
Uh I mean I I think there is an expiration date or a correction partly because I think the midterms is a clearing event. You know, that's probably going to be a very that's what most strategists will use to predict what the market's going to do near term. They never learn. They never really learned that that there really is a discounting um mechanism for the market.
So you said regardless of outcome, so if the if the Democrats were to take the House and the Senate, you don't think that that uh would would cause u any consternation in the stock market. Um I think one market's like gridlock. So having Congress controlled by the Democrats would be viewed as gridlock.
the AI stocks and crypto. Join us now Tom Lee, head of research at Fundstrat, chief investment officer of Fundstrat Capital as well as a CNBC contributor. The latest data point that you're interested in, Tom, was that that unemployment or that employment report, which in your view uh means that the previous one in August might have been a little bit of an outlier.
And from that you glean that any inflationary pressures from the labor market are unlikely. So you're back to thinking if if oil gets under control, inflation might not continue to be a problem. Yes. Good morning, Joe. That's right. I think going into last week's jobs report, the market had been working with a maximum hawkish Fed, one that was going to raise three times
Comments 0