Lee Sees Bullish Rally Coming Fast as Fed Weighs Rate Decision

Fundstrat Global Advisors co-founder Tom Lee expects a massive bullish rally in the stock market, regardless of whether the Federal Reserve raises or holds interest rates. According to Lee's thesis, both scenarios could lead to a significant increase in stocks and cryptocurrencies. He points out that investor skepticism has given way to upside support.

The key drivers behind this potential rally are sentiment, inflation, positioning, and cash parked on the sidelines. Sentiment has flipped to bearish, but historically rare for bull markets to peak during widespread bearishness. Inflation is moderating, with broken components forecast to fall away in six months, reducing headline PCE by 100 basis points.

A hike or hold would result in a bullish outcome, with the 10-year yield likely dropping and supporting stocks. Lee also notes that heavy cash parked on the sidelines and a four-day consecutive S&P 500 losing streak leave fuel for a rebound when certainty arrives. This could benefit the crypto market due to lower long-end yields, increasing risk appetite.