Tom Lee: Inflation Fears Are Overblown — Crypto Could Rip Higher

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Tom Lee (1:28)

I think economists are fighting last year's wars. Growth, it creates opportunity and risk. Most people focus on the risk. I think it's going to be a really bullish period for crypto for the next 12 months. Do they want to be right, or do they want to make money?

Maggie Lake (1:50)

Hello and welcome to Wealthion. I'm Maggie Lake. Joining me to discuss the outlook for global markets is Tom Lee, Head of Research at Fundstrat Global Advisors and Chairman of Bitmine. Hi, Tom. It's great to have you with us.

Tom Lee (2:00)

Thank you. It's good to be here.

Maggie Lake (2:04)

I think it's maybe a good idea if we just level set, because I know people know you well for being bullish US equities.

But talk to me a little bit, as usual, this probably oversimplifies things. Give me a little bit of an idea of where you're sitting in terms of the macro framework you're operating out of, or the expectations for markets. What's your kind of world view right now?

Tom Lee (2:28)

Let's see. You know, 2026, we were expecting this to be a challenging year, because we did expect good earnings growth.

But then, you know, there's a lot of speed bumps in the, that would take place this year. And I think that's kind of how the year's playing out, but I think it's a year where fundamentals are good, because, you know, stocks are most dependent on solid earnings visibility, and that's being fueled by AI, but not just AI, a recovery in ISM, and, you know, a broadening expansion. But there are, of course, things to worry about, such as the amount of debt being issued by the AI hyperscalers, and the amount of deficits run by the US, and, of course, this Iran war and other political turmoil. So I think it's serving to act as a way to keep investors worried and, as you know, markets climb a while worry. So, I mean, overall, I'd say I'm still very constructive for the next 12 months, but there's speed bumps ahead.

Maggie Lake (3:38)

Yeah, I think that's a great summary. And some of those speed bumps, especially when you're talking geopolitically, are really hard to game out, you know, traditionally. So, if we narrow the lens a little, we had a stronger than expected August jobs report, we have oil prices on the back of those geopolitical concerns and war high once again.

Has that changed anything fundamentally for you, for the outlook for the remainder of the year?

Tom Lee (4:04)

I mean, yes and no.

Yeah, we started this year expecting sometime later this year, so I guess now we're in the later part, for there to be a market drawdown. And there were multiple drivers of that, including midterm elections, the market testing of Fed.

There is a lot of leverage out there. And I think in general, at some point we have to adjust for sentiment. Markets always typically have a correction at some point during the year. And I mean, I'm probably still be sympathetic to that case. And as you know, one of the real issues at the moment is, there isn't a lot of consensus about what's happening with inflation. Because if I looked at market measures, the bond market and investors and pundits are very impatient because inflation has been not at the Fed's target. It hasn't been at the Fed's target for more than four years. And one solution, of course, is for the Fed to start raising interest rates. But I'm also very sympathetic to the argument that we are suffering from a series of distortions to CPI. We don't want that distortion to become the base case for the consumer. So we don't want the consumer to suddenly expect higher inflation. But that hasn't really shown up in the surveys yet. And if that's the case, then I'd be willing to give a little more grace to the Fed. And I think that by the end of the year, there might be demonstrable progress on inflation. So I think there's a lot of tension in markets. But as you know, if markets were easy and there was all agreement, everything would be priced in and there wouldn't be opportunity.