Tom Lee: Markets have already priced in a 75 bps hike

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01. so do you think we're getting 75 basis points today and how will the market react uh i think markets have already priced in 75 if you look at uh interest rate futures so i would say that makes a lot of sense because the fed doesn't necessarily want to surprise markets and i i think that i'd agree with those who say that a move like today is probably better for risk assets only because it really narrows the perception about how far the fed is behind you know a simple way to look at it is the spread between the two-year and fed funds which jeff gunlock has mentioned many times and it's at the highest level since may 94 today but after the hike this brings it down to levels that were actually lower than we were around april this year so i i think in some ways you know investors could actually start to feel better that the fed isn't as behind uh fewer upside surprises and of course the data has to start cooperating going forward but they're going to be really aggressive going forward don't don't you agree with that you saw fed funds futures what leasement was talking about uh where rates could really be going the market's just going to be just fine in in that scenario i think people have a hard time believing that it is uh yeah there's uh i would say that you can't nobody can say the macros is super clear right now um i think it's been helpful to see some of the slowing uh and the job cuts because that just shows the current hikes and the current tight financial conditions are slowing the economy and i think of course the unknown is what happens with gasoline because that that is really driving people's perceptions about cpi but on the flip side i'd agree with what kevin and jim have been saying you know there's a real test happening to corporate america here uh you know in the pandemic uh people expected earnings to collapse but companies slashed costs and managed through that well and i think that really earned them a view that they're kind of much more durable than people expected and now i think investors are also assuming that companies are going to get massacred in this current environment but if they're going to navigate through this better than expected and earnings hold up better then we're talking about a situation where investors are risk off the fed isn't necessarily going to shock markets with further surprises so even if rates you know if the fed hikes from here a lot of that's already priced into future interest rates so there's fewer surprises to discount rate and what you think risk premiums should do and so i think stocks could do a lot better john and jerry and i want your your counterpoint i suppose uh because you're extremely negative it sounds to me against what is farmer jim and kevin o'leary and tom lee's optimism yeah i mean i i'm an optimistic guy overall scott but i'm also um a realist and i'd love to hear tom's opinion on tom you heard today that ford had uh significantly higher delinquencies granted that's coming from a low rate i get it but that's only going to be accelerating for the next year um that's going to go over to credit card debt it's going to go over to mortgages we all know how this snowballs so how can i be as optimistic as you tom if i know that consumers that are 70 percent of the economy are going to be strapped they're not going to be able to trade you know as far as there'll be more people renting because home affordability is going to be going down meeting that mortgage payment is going to be a lot tougher unless biden actually did something about an energy policy which he has only done a negative energy policy so far i mean you you already said the price that will be paid to transport items for people i mean increasing interest rates doesn't bring food prices down doesn't bring gasoline prices down it just doesn't you cannot impact other things right but those two will not be brought down because people have to eat and they've got to get somewhere