Tom Lee, head of research at Fundstrat, believes easing US-China trade tensions could trigger a major stock market upswing.
A De-escalation Could Change Everything
In a recent CNBC interview, Lee argued that progress in tariff negotiations would significantly reduce recession fears. He noted that markets are currently pricing in a high probability of a recession, but a de-escalation would drastically alter that outlook. He believes there’s still plenty of room for a substantial market rebound, but it hinges on how the trade dispute unfolds.
Tariffs: The Key to Market Direction
Lee emphasizes the crucial role of US-China tariffs in shaping market trends. He warns that continued high tariffs would spell trouble for the global economy and would likely mean a bearish market. However, he thinks a de-escalation – which he considers likely – would dramatically improve the outlook, potentially leading to strong stock market performance for the remainder of the year. He points out the current high levels of reciprocal tariffs between the US and China as a major source of economic uncertainty. If either side backs down, or a compromise is reached, he expects the market to react very positively.
