Tom Lee is a prominent figure in the finance sector, primarily recognized for his expertise in equity research and market analysis. He is the co-founder of Fundstrat Global Advisors, a market research firm established in 2014, and prior to this, he served as the Chief Equity Strategist at J.P. Morgan in the United States. Lee is renowned for his insightful analysis of market trends and investment opportunities, making him a regular feature on financial news networks. He also has a notable interest in cryptocurrencies, especially Bitcoin, and is known for his bullish stance on them.

On 10 January 2024, Lee joined Joe Kernen on CNBC’s “Squawk Box” to discuss a range of topics including the SEC’s decision on spot Bitcoin ETFs, market trends, the Federal Reserve’s rate path, and the overall economic outlook for 2024, including recession risks.

2024 Market Outlook

Lee expressed optimism about 2024, predicting it to be a good year for stocks. He anticipates that the inflation war will no longer be a primary concern, with manufacturing PMIs bottoming and earnings beginning to accelerate. He also expects increased capital expenditure (CAPEX) spending, which should positively impact earnings. However, he cautioned that the first six months might be challenging due to investor anxiety regarding the Federal Reserve’s actions.

Stock Market Predictions

Lee suggested that the market might see a decline of up to 5% by March, which he views as a buying opportunity. He believes that the economy is not heading towards a hard landing, with the only significant risk being a potential recession.

Recession Risk

Lee estimated the risk of a recession to be low, around 20% or even less, which is typical for any given year. He noted that the market has priced in a higher recession risk than what he believes is likely.

Earnings Outlook for 2024

Lee expects a 10% earnings gain on the S&P 500 in 2024. He anticipates an improvement in unit demand, particularly as interest rates lower, boosting housing demand and having a multiplier effect on GDP.

Fed Rate Cuts and Economic Implications

Lee discussed the debate over the number of Fed rate cuts expected in 2024. He emphasized that inflation is on a downward trajectory and should approach the target by the end of the year. He believes the focus should be less on the number of Fed cuts and more on how the bond market reacts to inflation trends.

Inflation and Consumer Expectations

Lee mentioned that consumer expectations for inflation have returned to pre-pandemic levels. He pointed out that if housing and car prices normalize, there wouldn’t be much driving inflation. He even suggested that used car prices could fall significantly in the next 12 months.

Bitcoin Price Prediction

When asked about Bitcoin, Lee predicted that its price could exceed $100,000 in the next 12 months, potentially reaching over $150,000. He highlighted Bitcoin’s finite supply and the potential for a significant increase in demand:

I think in the next 12 months, something over $100,000, maybe $150,000. And in the next five years, there’s a finite supply, and now we have a potentially huge increase in demand with a spot Bitcoin [exchange-traded fund] approval, so I think in five years, something around $500,000 would be potentially achievable.”

Featured Image via Pixabay