Tom Lee Predicts Strong Market Rally in September with Fed Surprise
Fundstrat's Tom Lee predicts that markets could 'rally very strongly' in September, driven by the Federal Reserve's decision on interest rates. According to Lee, there is a historical tendency for weakness in September, but mounting bearish consensus may actually lead to an upside surprise.
Lee's base case is that the Fed holds rates steady at its September 15 meeting, accompanied by weaker jobs and CPI data, which would trigger a strong market rally. He estimates that any October weakness would be shallow, with the S&P support around 7,300 to 7,400 before pushing towards 8,200 or higher by year end.
Lee also believes that the four-year crypto cycle is coming to an end in September, which could attract sidelined investors back into the market. He points out that Korean investors who rotated into AI stocks early this year are already showing volume pickups in crypto, and a passage of the CLARITY Act would give Bitcoin and Ethereum a significant tailwind in Q4.
Lee is optimistic about the prospects for cryptocurrency in Q4, citing four reasons: crypto is already the best-performing macro asset of Q3, the four-year cycle is ending, Korean investors are rotating into crypto, and the potential passage of the CLARITY Act. He believes that 'very few people own crypto,' which could lead to a rally in Bitcoin prices, potentially reaching six figures.