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all right time now to bring in our halftime headliner Mr Tom Lee he's the head of research and a managing partner at funstrat also a CNBC contributor Tom it's great to have you here at post nine great to see you all all right so you got a new note out today I want to I want to make sure I point out you are the biggest bull on the street s p Target of 4 700 about a six percent upside from where we are right now next closest only a two and a half percent Rise um you put out this note today saying that we're not seeing the normal Fed Playbook with their tightening cycle this is an inflation War how does that shape or how should it shape investors view of the rally that we're seeing and your outlook for the rest of the year I think it I think that there's two things the market sort of framework uh I think is changing and and that's why there's momentum in stocks the first is I think too many economists think this is a traditional business cycle fed cycle tight until you break the economy but it's really an inflation War and the FED will slow down or even stop when inflation expectations break we got the umish uh one year inflation service I don't know if people saw it 3.3 percent that's an utter collapse in consumer expectations of inflation I mean just utter collapse so I think the feds a lot has done a lot sooner than people realize so did that change the Rules of Engagement when you're looking at this market and where to put money or maybe even pull or trim money uh yes a couple things if you look at past inflation Wars when the inflation War is Over strangely enough the market pins itself to the original level meaning like 80 82 you saw the stock market recover the entire 27-month bear Market in four months and I think what we're seeing today is the stock market is trying to pin itself back to 4 800 led by cyclicals because these companies survived an inflation war and you know they've been battle tested but I think the second thing that people have been sort of expecting widely held as a recession but instead of us falling into a recession we're actually slipping into an expansion I mean look at Q2 earnings X energy it's up year over year the first time in six quarters so I think earnings at bottom Jack Gorman at Morgan Stanley said the same thing at a conference that you know talking to all the CEOs his gut feels that the economy's bottom so we have an inflation trajectory that could get the FED to cool off and we have an expansion that's an early cycle trade that we see the old hives you also put out some fresh money ideas in this group you are looking at Tech but it's not the tech we've been talking about those seven names I'm talking Cisco Juniper names like that why are you feeling bullish about names like that right now and the tech space but outside the AI plates uh well you know our our number one sector pick remains Fang and you know we're recommending people look at the laggards of the Fang but that's not necessarily easy as Josh was saying to put a huge allocation to work uh there is a lot of evidence the Market's broadening and I think pretty adjacent to a lot of the talk about AI is com equipment and and so that's why we we've listed names like Motorola and Cisco and F5 but at the same time the consumer discretionary space really benefits from a broadening market and also an inflation War that's being won and that's why we highlighted the airlines is it also a valuation Story I mean I'm looking at Cisco's valuation 13 times award earning Juniper 14 times forward earning in that space are these you know below the trend valuations does that make this play more attractive in your mind or is it the business itself uh it's a little bit of both Frank because you know I don't want to discourage anyone when you have a secular story you don't want to be valuation sensitive so no one should really be disputing the PES of an AI play but when you think of allocated dollars in capex to AI that Cisco is going to capture if if they can have sustained growth the multiple is going to go up towards 20 or 30.
so there's a multiple expansion story on top of an earnings story so as I said you're the biggest bull in the street s p Target of 4 700 any thoughts about raising it uh you know we could raise it if breath is expanding I mean I think one thing we're watching is the small caps uh you know Josh is pointing out they are starting to participate but though of course you know investors need to be wary that nothing goes straight up so I think there is a chance of course a window where there could be a tactical pullback I mean maybe it's going to be caused by the vix or some other stumble and and we would just I think it's more important for the viewers to know that that's that's a dip they need to buy instead of thinking it's a top a stumble then it goes back up again yes all right Tom Leah funster at Tom thank you so much for being here at post nine
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