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0:00 · Joining us now, Tom Lee, Funstrat,
0:02 · Global Advisors, head of research, uh,
0:04 · and a CNBC contributor. Once again, Tom,
0:06 · um, looking at your last couple of
0:08 · appearances. Whenever you're, actually,
0:10 · it's been a while now when you're on, I
0:11 · kind of hold my breath after some of
0:13 · your, uh, your forecast because a lot of
0:15 · times I think no way. And then it it's
0:17 · always seemed you have not been really
0:20 · wrong yet in any significant way. Do you
0:24 · do you ever have any
0:27 · um, trepidation, second thoughts? Do you
0:29 · ever get nervous about any of your
0:30 · calls?
0:31 · Uh yeah, all the time filled with doubts
0:33 · because you know the future
0:36 · no one could be right off your 51%
0:38 · you're like the best ever uh in this
0:40 · business.
0:41 · You're still bullish even though you you
0:43 · talked about last week a little wobble
0:45 · in some stocks sell on the news because
0:47 · of China uh now it looks like a little
0:50 · bit of hawkishness out of out of JPAL. I
0:52 · don't know if that lasts.
0:54 · Yeah, that's right. I think the market
0:55 · has a lot of walls of worry because we
0:57 · got the shutdown. We've got China, we
1:00 · got the Fed speak, but the market's been
1:02 · up six months in a row now. Only six
1:05 · times since 1928 that's happened. So it,
1:09 · if you look at November, we're up five
1:11 · or six times. And in 1942, it was flat.
1:14 · So basically, November should be really
1:16 · strong. I think at least 200 points on
1:18 · the S&P. So maybe
1:19 · for November.
1:20 · Yeah, maybe even 250. So maybe we get to
1:22 · 71.
1:23 · See, that's a call that I just wish you
1:25 · wouldn't make a call like that, right?
1:27 · Uh well you you could 250 to 3% if that
1:31 · makes you feel better.
1:32 · It does make me feel a little bit better
1:33 · because 250 points to say in November
1:37 · 250 point you're giving a time and a
1:40 · size. That's
1:41 · but maybe we wobble the first couple
1:42 · weeks just to digest all the games.
1:44 · Yeah, that's what I saw in your notes.
1:46 · So initially there could be some uh some
1:49 · uh some choppy trading uh at this point.
1:51 · What's driving everything? There's still
1:54 · I guess sentiment is not positive is it?
1:56 · You mentioned the wall of worry.
1:57 · Yeah. I mean, if you look at it like AI,
2:00 · the average sentiment this year is still
2:02 · minus 11.5. Like net sodly bearish.
2:05 · That's only happened three other times
2:07 · in 35 years. All in the middle of bare
2:09 · markets. So investors feel like it's a
2:12 · bare market, but we're up 17%.
2:15 · Which kind of tells me I think there's a
2:16 · big performance chase into your end. You
2:18 · know, over 80% of fund managers are
2:20 · missing their benchmark this year.
2:22 · Wow. And you don't care about not having
2:26 · government data because does the market
2:28 · ever really wait for government data?
2:31 · It's it sort of sniffs it out, doesn't
2:32 · it? The all knowing market.
2:34 · That's right. Because you know, we have
2:35 · good Fed futures to look at what's
2:36 · implied for inflation. You know, the Fed
2:38 · looks at the bond market. The bond
2:40 · market figures things out before the
2:42 · data comes out. Uh I do think the
2:44 · inflation is probably falling a lot
2:46 · faster than everyone expects. I mean,
2:49 · you can look at true inflation and we're
2:50 · down to sub 2% inflation including
2:54 · housing.
2:54 · Shelter. Yeah.
2:55 · Yeah. And shelter is finally cracked.
2:58 · Yeah.
2:58 · Cuz that CPI number was it it I mean it
3:01 · just barely uh cooler than expected,
3:04 · wasn't it?
3:05 · Yes. But um the shelter piece is now at
3:08 · 0.16 month over month. That's at 2%
3:10 · year-over-year. That level uh would
3:13 · bring core inflation down sharply. and
3:15 · over 54% of the CPI components are now
3:17 · deflating. It's the highest percentage
3:20 · since uh co started.
3:22 · It seems Tom that the markets have
3:25 · largely because of what you're
3:26 · describing moved on from the inflation
3:29 · watch.
3:29 · Uh they've kind of put that aside as
3:32 · maybe the forefront risk uh and much
3:35 · like the Fed has been dragged to doing
3:37 · wondering about downside risk to growth.
3:38 · I mean, if you just look at things like
3:40 · the reaction of homebuilder stocks,
3:43 · consumer cyclicals, regional banks, just
3:45 · to that hawkish cut by Powell last week,
3:48 · it seems like it's not hard to get the
3:50 · market a little bit uneasy about, you
3:52 · know, just exactly what kind of a soft
3:54 · patch this is, even if we have
3:55 · confidence that maybe it firms up into
3:57 · next year. So, how about how does that
3:58 · play into the overall action in the
4:00 · index and what you expect from the
4:02 · market? Yeah, I I mean I think there is
4:03 · something the market is trying to figure
4:04 · out which is AI is consuming jobs but
4:08 · that's turning it into profits for
4:10 · corporates. So like profits are
4:11 · expanding and then we have profit
4:14 · margins have actually been going up in
4:16 · the middle of tariffs. So how are
4:18 · companies able to take 70% of the tariff
4:21 · hit but margins are going up. So there
4:23 · must be a productivity boom somewhere
4:25 · and then we have like you said seven
4:27 · trying to cash on the sidelines but we
4:29 · have high rates and so the Fed I kind of
4:33 · think is trying to not overheat the
4:35 · economy but we know that you just point
4:37 · out like housing's in big trouble. So I
4:39 · would say it makes sense if inflation's
4:41 · in a good place and jobs aren't really
4:44 · strengthening for cuts to happen and
4:46 · that would be really doubbish. So I
4:47 · think that sort of comes together before
4:49 · the end of the year.
4:51 · Andrew.
4:52 · Hey, Tom. Have you been Tom, have you
4:55 · been reading all these stories that just
4:56 · been out uh, you know, recently here
4:59 · about how how the the Fed is is doing
5:01 · all of this sort of repo activity? Like
5:03 · a lot of repo activity. And I just
5:05 · wonder what that really means for both
5:09 · the markets um, and maybe even for
5:11 · crypto. I mean, this this is a ton of
5:14 · money. I mean, it looks like something
5:16 · like $30 billion just to ease liquidity
5:18 · concerns. this is you know past couple
5:21 · days kind of thing.
5:22 · Uh yeah it it is pretty typical in into
5:25 · month end right that's what what we are
5:27 · seeing and I think that some of these
5:29 · numbers are also being distorted because
5:31 · of the government shutdown. So we know
5:33 · that the Treasury reserves are building
5:35 · because there aren't any payments being
5:37 · made. So, uh, it is something we're
5:39 · watching, but if I was to say that
5:41 · there's signs of bank stress, I'd also
5:44 · be looking for high yield spreads to be
5:46 · widening. And those are actually staying
5:48 · pretty calm.
5:49 · So, you figure no problem with 7,000 by
5:52 · the end of the year. More likely
5:54 · something even above that in your view
5:56 · like what like 7,300?
5:58 · Yeah. I mean, maybe 7,300 7,500.
6:01 · 7,500.
6:01 · Yeah. So, we still in December we would
6:03 · build on those November gains.
6:05 · See, Sull is like, no way. No, I don't
6:08 · say no way. I'm open-minded to to how
6:10 · far bull markets can go, right? Strong
6:11 · years end strong. We all know about
6:13 · that. The one piece of it I I think it's
6:15 · worth kind of struggling with a little
6:17 · bit though, Tom, is you can look at the
6:18 · AI surveys, kind of what people are
6:21 · saying, and then you see, you know,
6:24 · equity exposures in, you know, Bank of
6:27 · America private client accounts are
6:28 · basically at their highs, right? So,
6:30 · people have kind of in aggregate been
6:32 · riding this to some degree. And then you
6:34 · see a lot of what we've talked about in
6:36 · the last several months of you know this
6:38 · kind of uphwelling of speculative action
6:39 · in nonprofitable tech stocks lowquality
6:42 · uh equities leading that's not the max 7
6:44 · that's like a lot of other marginal
6:46 · stuff. So how do you jive that with with
6:48 · that sense that people are still
6:49 · skeptical? Uh yeah, I mean one we know
6:53 · there must be skepticism because if
6:55 · people were bullish their per the
6:56 · institutional fund managers should have
6:58 · better performance but as you know this
7:00 · is one of the worst years for fund
7:01 · managers um in almost 30 years. Um I
7:05 · think that there is also kind of
7:07 · problems in private markets. So I think
7:10 · private credit is doing terribly and I
7:12 · think a lot of LPs in alternative funds
7:15 · whether it's venture or private equity
7:17 · are pretty disappointed by the returns
7:19 · like the 5 years into now but the stock
7:22 · market's done well. So I I think that
7:24 · there is bearishness because like
7:26 · private equity hasn't come through and
7:28 · fund managers are doing badly but you're
7:30 · right the ones who stuck with public
7:31 · stocks are are doing well.
7:33 · I want you to quit while you're ahead
7:34 · but I have to ask you about Bitcoin. I
7:36 · mean, you want to go out on a limb
7:38 · there, too, because it it's weak again
7:39 · today, 107. Go below 100 or or no?
7:42 · Well, you know, Bitcoin, I mean, if I
7:45 · look at everything since October 10th,
7:47 · because that was the biggest liquidation
7:49 · in the history of crypto, like bigger
7:51 · than FD,
7:51 · a margin call. Yeah.
7:53 · Yeah. It was like a almost a miniature
7:56 · rupture, like tsunami.
7:58 · Um, we're only a couple weeks from that.
8:00 · So, I think the market is consolidating.
8:02 · But if I look at fundamentals like let's
8:04 · like Ethereum stable coin volumes have
8:07 · been exploding application revenues at
8:08 · all-time highs. So right now
8:10 · fundamentals are leading price in
8:12 · crypto. So, I think eventually we
8:14 · consolidate and then we rally into your
8:15 · end
8:16 · two
8:18 · 150. Uh yeah, I think we can still get
8:20 · to 15200 for Bitcoin and then something
8:23 · like 7,000 for Ethereum.
·

--> YouTube-Generated Transcript <--
0:00	·	Joining us now, Tom Lee, Funstrat,
0:02	·	Global Advisors, head of research, uh,
0:04	·	and a CNBC contributor. Once again, Tom,
0:06	·	um, looking at your last couple of
0:08	·	appearances. Whenever you're, actually,
0:10	·	it's been a while now when you're on, I
0:11	·	kind of hold my breath after some of
0:13	·	your, uh, your forecast because a lot of
0:15	·	times I think no way. And then it it's
0:17	·	always seemed you have not been really
0:20	·	wrong yet in any significant way. Do you
0:24	·	do you ever have any
0:27	·	um, trepidation, second thoughts? Do you
0:29	·	ever get nervous about any of your
0:30	·	calls?
0:31	·	Uh yeah, all the time filled with doubts
0:33	·	because you know the future
0:36	·	no one could be right off your 51%
0:38	·	you're like the best ever uh in this
0:40	·	business.
0:41	·	You're still bullish even though you you
0:43	·	talked about last week a little wobble
0:45	·	in some stocks sell on the news because
0:47	·	of China uh now it looks like a little
0:50	·	bit of hawkishness out of out of JPAL. I
0:52	·	don't know if that lasts.
0:54	·	Yeah, that's right. I think the market
0:55	·	has a lot of walls of worry because we
0:57	·	got the shutdown. We've got China, we
1:00	·	got the Fed speak, but the market's been
1:02	·	up six months in a row now. Only six
1:05	·	times since 1928 that's happened. So it,
1:09	·	if you look at November, we're up five
1:11	·	or six times. And in 1942, it was flat.
1:14	·	So basically, November should be really
1:16	·	strong. I think at least 200 points on
1:18	·	the S&P. So maybe
1:19	·	for November.
1:20	·	Yeah, maybe even 250. So maybe we get to
1:22	·	71.
1:23	·	See, that's a call that I just wish you
1:25	·	wouldn't make a call like that, right?
1:27	·	Uh well you you could 250 to 3% if that
1:31	·	makes you feel better.
1:32	·	It does make me feel a little bit better
1:33	·	because 250 points to say in November
1:37	·	250 point you're giving a time and a
1:40	·	size. That's
1:41	·	but maybe we wobble the first couple
1:42	·	weeks just to digest all the games.
1:44	·	Yeah, that's what I saw in your notes.
1:46	·	So initially there could be some uh some
1:49	·	uh some choppy trading uh at this point.
1:51	·	What's driving everything? There's still
1:54	·	I guess sentiment is not positive is it?
1:56	·	You mentioned the wall of worry.
1:57	·	Yeah. I mean, if you look at it like AI,
2:00	·	the average sentiment this year is still
2:02	·	minus 11.5. Like net sodly bearish.
2:05	·	That's only happened three other times
2:07	·	in 35 years. All in the middle of bare
2:09	·	markets. So investors feel like it's a
2:12	·	bare market, but we're up 17%.
2:15	·	Which kind of tells me I think there's a
2:16	·	big performance chase into your end. You
2:18	·	know, over 80% of fund managers are
2:20	·	missing their benchmark this year.
2:22	·	Wow. And you don't care about not having
2:26	·	government data because does the market
2:28	·	ever really wait for government data?
2:31	·	It's it sort of sniffs it out, doesn't
2:32	·	it? The all knowing market.
2:34	·	That's right. Because you know, we have
2:35	·	good Fed futures to look at what's
2:36	·	implied for inflation. You know, the Fed
2:38	·	looks at the bond market. The bond
2:40	·	market figures things out before the
2:42	·	data comes out. Uh I do think the
2:44	·	inflation is probably falling a lot
2:46	·	faster than everyone expects. I mean,
2:49	·	you can look at true inflation and we're
2:50	·	down to sub 2% inflation including
2:54	·	housing.
2:54	·	Shelter. Yeah.
2:55	·	Yeah. And shelter is finally cracked.
2:58	·	Yeah.
2:58	·	Cuz that CPI number was it it I mean it
3:01	·	just barely uh cooler than expected,
3:04	·	wasn't it?
3:05	·	Yes. But um the shelter piece is now at
3:08	·	0.16 month over month. That's at 2%
3:10	·	year-over-year. That level uh would
3:13	·	bring core inflation down sharply. and
3:15	·	over 54% of the CPI components are now
3:17	·	deflating. It's the highest percentage
3:20	·	since uh co started.
3:22	·	It seems Tom that the markets have
3:25	·	largely because of what you're
3:26	·	describing moved on from the inflation
3:29	·	watch.
3:29	·	Uh they've kind of put that aside as
3:32	·	maybe the forefront risk uh and much
3:35	·	like the Fed has been dragged to doing
3:37	·	wondering about downside risk to growth.
3:38	·	I mean, if you just look at things like
3:40	·	the reaction of homebuilder stocks,
3:43	·	consumer cyclicals, regional banks, just
3:45	·	to that hawkish cut by Powell last week,
3:48	·	it seems like it's not hard to get the
3:50	·	market a little bit uneasy about, you
3:52	·	know, just exactly what kind of a soft
3:54	·	patch this is, even if we have
3:55	·	confidence that maybe it firms up into
3:57	·	next year. So, how about how does that
3:58	·	play into the overall action in the
4:00	·	index and what you expect from the
4:02	·	market? Yeah, I I mean I think there is
4:03	·	something the market is trying to figure
4:04	·	out which is AI is consuming jobs but
4:08	·	that's turning it into profits for
4:10	·	corporates. So like profits are
4:11	·	expanding and then we have profit
4:14	·	margins have actually been going up in
4:16	·	the middle of tariffs. So how are
4:18	·	companies able to take 70% of the tariff
4:21	·	hit but margins are going up. So there
4:23	·	must be a productivity boom somewhere
4:25	·	and then we have like you said seven
4:27	·	trying to cash on the sidelines but we
4:29	·	have high rates and so the Fed I kind of
4:33	·	think is trying to not overheat the
4:35	·	economy but we know that you just point
4:37	·	out like housing's in big trouble. So I
4:39	·	would say it makes sense if inflation's
4:41	·	in a good place and jobs aren't really
4:44	·	strengthening for cuts to happen and
4:46	·	that would be really doubbish. So I
4:47	·	think that sort of comes together before
4:49	·	the end of the year.
4:51	·	Andrew.
4:52	·	Hey, Tom. Have you been Tom, have you
4:55	·	been reading all these stories that just
4:56	·	been out uh, you know, recently here
4:59	·	about how how the the Fed is is doing
5:01	·	all of this sort of repo activity? Like
5:03	·	a lot of repo activity. And I just
5:05	·	wonder what that really means for both
5:09	·	the markets um, and maybe even for
5:11	·	crypto. I mean, this this is a ton of
5:14	·	money. I mean, it looks like something
5:16	·	like $30 billion just to ease liquidity
5:18	·	concerns. this is you know past couple
5:21	·	days kind of thing.
5:22	·	Uh yeah it it is pretty typical in into
5:25	·	month end right that's what what we are
5:27	·	seeing and I think that some of these
5:29	·	numbers are also being distorted because
5:31	·	of the government shutdown. So we know
5:33	·	that the Treasury reserves are building
5:35	·	because there aren't any payments being
5:37	·	made. So, uh, it is something we're
5:39	·	watching, but if I was to say that
5:41	·	there's signs of bank stress, I'd also
5:44	·	be looking for high yield spreads to be
5:46	·	widening. And those are actually staying
5:48	·	pretty calm.
5:49	·	So, you figure no problem with 7,000 by
5:52	·	the end of the year. More likely
5:54	·	something even above that in your view
5:56	·	like what like 7,300?
5:58	·	Yeah. I mean, maybe 7,300 7,500.
6:01	·	7,500.
6:01	·	Yeah. So, we still in December we would
6:03	·	build on those November gains.
6:05	·	See, Sull is like, no way. No, I don't
6:08	·	say no way. I'm open-minded to to how
6:10	·	far bull markets can go, right? Strong
6:11	·	years end strong. We all know about
6:13	·	that. The one piece of it I I think it's
6:15	·	worth kind of struggling with a little
6:17	·	bit though, Tom, is you can look at the
6:18	·	AI surveys, kind of what people are
6:21	·	saying, and then you see, you know,
6:24	·	equity exposures in, you know, Bank of
6:27	·	America private client accounts are
6:28	·	basically at their highs, right? So,
6:30	·	people have kind of in aggregate been
6:32	·	riding this to some degree. And then you
6:34	·	see a lot of what we've talked about in
6:36	·	the last several months of you know this
6:38	·	kind of uphwelling of speculative action
6:39	·	in nonprofitable tech stocks lowquality
6:42	·	uh equities leading that's not the max 7
6:44	·	that's like a lot of other marginal
6:46	·	stuff. So how do you jive that with with
6:48	·	that sense that people are still
6:49	·	skeptical? Uh yeah, I mean one we know
6:53	·	there must be skepticism because if
6:55	·	people were bullish their per the
6:56	·	institutional fund managers should have
6:58	·	better performance but as you know this
7:00	·	is one of the worst years for fund
7:01	·	managers um in almost 30 years. Um I
7:05	·	think that there is also kind of
7:07	·	problems in private markets. So I think
7:10	·	private credit is doing terribly and I
7:12	·	think a lot of LPs in alternative funds
7:15	·	whether it's venture or private equity
7:17	·	are pretty disappointed by the returns
7:19	·	like the 5 years into now but the stock
7:22	·	market's done well. So I I think that
7:24	·	there is bearishness because like
7:26	·	private equity hasn't come through and
7:28	·	fund managers are doing badly but you're
7:30	·	right the ones who stuck with public
7:31	·	stocks are are doing well.
7:33	·	I want you to quit while you're ahead
7:34	·	but I have to ask you about Bitcoin. I
7:36	·	mean, you want to go out on a limb
7:38	·	there, too, because it it's weak again
7:39	·	today, 107. Go below 100 or or no?
7:42	·	Well, you know, Bitcoin, I mean, if I
7:45	·	look at everything since October 10th,
7:47	·	because that was the biggest liquidation
7:49	·	in the history of crypto, like bigger
7:51	·	than FD,
7:51	·	a margin call. Yeah.
7:53	·	Yeah. It was like a almost a miniature
7:56	·	rupture, like tsunami.
7:58	·	Um, we're only a couple weeks from that.
8:00	·	So, I think the market is consolidating.
8:02	·	But if I look at fundamentals like let's
8:04	·	like Ethereum stable coin volumes have
8:07	·	been exploding application revenues at
8:08	·	all-time highs. So right now
8:10	·	fundamentals are leading price in
8:12	·	crypto. So, I think eventually we
8:14	·	consolidate and then we rally into your
8:15	·	end
8:16	·	two
8:18	·	150. Uh yeah, I think we can still get
8:20	·	to 15200 for Bitcoin and then something
8:23	·	like 7,000 for Ethereum.
	·