Tom Lee: Markets will move higher in March but bear market will hit later in the year

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It's Tom Lee of Fundstrat, the co-founder, chief strategist joins us now here at Future Proof. You're brave you're brave soul wearing a suit and tie here on the beach, but it's how you roll, Tom. Welcome. guess that's being a contrarian, right, Scott? Yeah, well, I'll tell you, you know, you you sort of are.

Now, you're you're not negative on stocks, but you you do have a base case that at some point this year we're going to go down 20% that we're going to have a bear market. Was this this the first whiff of that? Um you know, our our take is we do expect that decline to happen when markets don't respond to good news.

So, I think we're in a period where we had a bear market already in software, the mag seven, and in crypto. I think that's already taken out a lot of speculation. So, to me, I think our bet would be markets are actually going to lift through the end of the month that we're going to actually be positive for March and maybe hit 7,300.

Later in the year is when we think a bear market might show itself. What what about oil, right? We're we're watching it so closely. We're we're driven by headlines, some of which are apparently erroneous. Uh I don't know what you What do you do with that? Yeah, I mean, it's a very confusing time. I I think it's very difficult if someone's trying to trade both the headlines or trade oil.

But, if I look back at the last 2 days, oil's $15 higher than it was last week, but the S&P's higher. So, to me, the market actually is handling higher oil prices better. And you know, we wrote in our note this morning that we think higher oil prices are actually good for the US stock market. Yeah, see, I think that's going to be a really hard sell for people who are watching this program.

Like, trying trying almost too hard to to paint some bullish scenario. How in the world are higher oil prices, which then mean even higher gas prices, which mean higher jet fuel prices, and all sorts of other issues that are related to that input cost on a whole number of other industries. How is that possibly good for the stock market?

Yeah. Part of it's a relative. You know, one US is an export of oil. So, we net benefit as an economy from higher oil. The second is other countries are importers. So, the US not only looks better, but on a relative growth basis, it should outperform, which means flows back into the US. And the third is as we worry about global growth for all the reasons you describe, when growth is scarce, people buy growth stocks.

The US stock market is a growth index. So, it's coming out of the rest of world back in the US. So, I think it's a rotation story. Speaking of growth stocks, um tech has been up for debate, certain parts of it more than others. We're going to get Oracle earnings after the bell tonight. You told me earlier this morning on the stage there on the beats that you think software's bottomed.

Yeah. Why? Well, I think software has bottomed because we tend to price in the negative risks early, which I think's happened, and we've seen the multiples come in. You know, the the IGV, which is the software ETF index, has lost five multiple points. Now, the forward PE is 16 times. So, to me, uh you're you're trading this like a cyclical industry now, and I think out of that universe of 110 stocks, many actually have durable businesses.

So, I think you're getting paid to buy it here at 16 times. the the broadening trade? Where where does that stand? Then again, if we're talking about you make the statement that higher oil prices are actually okay, or if not better for the for the stock market, doesn't the broadening trade have an issue with that?

I mean, if you start worrying about the impact of higher oil prices on the economy itself, how does the broadening trade work? Um I think it's a good question, and we do have to remember there's the stock market, and it's not always the economy. So, I think the US economy is going to have some risks uh for the reasons you described, which is why I think growth stocks start to look better, which is a lot of tech.

And again, the US is a growth index. I'd probably lean towards growth stocks outperform, which is not a necessarily a broadening trade. Let's finish with a a quick one on on Bitcoin because I I think it hasn't traded like many had suspected it would at times of turmoil in the market. It it wasn't a safe haven play.

It wasn't digital gold, so to speak. I mean, gold was gold, and gold traded well. So, where does Bitcoin go from here? Is your confidence in it in any way shaken? Uh it's not. I mean, Bitcoin did basically break on October 10th cuz that was the biggest deleveraging event in the history of crypto. When gold went up, Bitcoin went down, but I think we have gone through a winter where a lot of the speculation and the leverage is gone, and I think this weekend kind of showed Bitcoin is is coming back in vogue as a store value because oil prices went up, but over the weekend, crypto prices actually surged, and Bitcoin, as you know, is holding above 70,000 now.