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Inflation is falling fast enough for the U.S. Federal Reserve to cut rates this year, which will benefit the stock market, according to Tom Lee, the founder and head of research at Fundstrat Global Advisors.
In a new CNBC interview, Lee says there are “many reasons” to believe the current stock market rally will continue.
“Part of it is that we do think that the inflation trajectory is on a glide path lower than consensus expects. The second is that I think there’s too much caution out there. You know, when you look at prime brokerage borrowings, or basically leverage in the market, it’s still below where it was in October 2021.
There’s still $6 trillion in cash on the sidelines, and in our conversations with clients, they’re still quite cautious, so as long as investors are top-calling and are really looking at the world half-empty, I think stocks can still rise on this wall of worry.”
Lee is also a vocal crypto bull. About a month ago, the Fundstrat executive predicted that Bitcoin (BTC) could surge past $150,000 in the next 12-18 months.
“We’ve got more visible demand from the spot exchange-traded fund (ETF) and we know the supply dynamic is improving with the halving coming up which is less than a month away.
It does help that the Federal Reserve is becoming dovish, that’s easier monetary policy.
And I think from a regulatory perspective we had so many hammers dropped in the last 12 months, really 18 months, that unless it’s going to be worse over the next two years, Bitcoin’s already faced sort of the peak of regulatory backlash.”
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