Market Overreaction and Fed Rate Cuts
Fundstrat’s Tom Lee believes the stock market overreacted to the Trump administration’s tariffs. He told CNBC that the Federal Reserve is likely to start cutting interest rates soon because inflation is cooling down. He even noted that the chances of a rate cut in May are increasing. Online betting markets currently put the odds of a 25-basis-point rate cut in two months at around 33%.
The “Trump Put” and Stock Market Opportunities
Lee also suggested a “Trump put” exists – meaning the White House might intervene to support the market. He pointed to Tesla’s recent drop and Trump’s subsequent comments on the company as an example. He sees attractive investment opportunities in the current market, particularly in stocks that have recently fallen significantly.
Bitcoin’s Future Amidst Market Uncertainty
While acknowledging that Bitcoin and other cryptocurrencies aren’t immune to market downturns, Lee remains optimistic about Bitcoin’s long-term prospects. He referenced a technical analysis predicting Bitcoin could fall to $62,000 by the end of March, but emphasized that even at that price, Bitcoin’s returns over the past decade have been impressive. He believes Bitcoin’s utility and its status as a store of value will continue to grow. He does, however, caution that Bitcoin is a risk-on asset and will likely suffer during periods of market turmoil like the current tariff situation.