Tom Lee: The Market Can Climb Higher—But Expect Turbulence | #630

**Meb Faber** (0:06)
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Meb Faber is the co-founder and Chief Investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

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**Meb Faber** (1:05)
Welcome back, everybody. We got a great episode today. I'm super excited. Today's guest is Tom Lee, co-founder, head of research at Fundstrat Global Advisors. Prior to co-founding Fundstrat, he served as JP. Morgan's chief equity strategist from 2007 to 2014
He also entered the ETF Terror Dome game with the Granny Shots US Large Cap ETF, one of my favorite tickers, GRNY. Tom, welcome to the show.

**Tom Lee** (1:30)
Thank you. Thanks for having me.

**Meb Faber** (1:32)
I thought we'd jump right in.
I love listening to you talk macro markets. You guys had a comment where you're talking about selling the buildup and buying the invasion. I thought that'd be a good place to kick it off. Where do we go from here?

**Tom Lee** (1:44)
A lot of investors are surprised because the US is in the midst of a war that could be a long war and oil prices are at record highs.
And I think a lot of folks at the start of this year would have said that this would have been enough to trigger a bear market or even a recession. But instead the S&Ps at an all time high, and the groups that led last year like AI and Semi's are the ones leading again. So I think it's really speaks to me about the resilience of the US economy and maybe the continued very weak conviction of most investors.

**Meb Faber** (2:25)
I know you talked about S&P magic number 7300
And we're there. What led you to that cause? You were thinking about it ahead of time.

**Tom Lee** (2:34)
Well, in early December, we typically look at the year ahead and we write down what we think are the key drivers and what the contours of the market would look like. So December 2025, as we were thinking about this year, we just thought this year would look a lot like 2025, which is a difficult year for markets, but ultimately very strong.
But in the middle of that, we penciled in the idea that the market would test a new Fed, and therefore we would have a sort of start to the year that would be strong. 7300 was an aspirational number at the time because the S&P was in the 6000s. But then we think that they'd be a pause, and then the setup would still be positive because we think there were some structural tailwinds, so we thought we'd end the year 2026 at 7700 So the year is tracking the way we expected, although we're a bit above 7300 right now.
But if someone asked me today, well, first of all, can the S&P make its way to 7800 first? Before I draw it out, I think anything's possible, but I think what I am mindful of is that stocks were a lot cheaper at the end of March, at the market lows. They're a lot less cheap now, so a lot of good news is priced in, and I still think that there is potential for turbulence in the middle of this year, and with maybe more reasons for it, one being, of course, the market testing a new Fed. But second is, I think it's still hard for me to reconcile that oil prices are not reflecting the acute shortage that's developing for petroleum products around the world. So I think that there's going to be some reconciliation maybe later this year.

**Meb Faber** (4:23)
Let's expand on that, because I've heard you say at 100 bucks, it doesn't kill the US economy. Do you think this resolves in a way where oil moves higher? Do you think it resolves where it's just, it's not as much of an impact to us today because we produce so much? Or like, what's the thesis behind that?