In an interview with CNBC, Lee said he expects Q3 earnings growth of almost 30% and more than 20% upward revisions to 2027 EPS estimates.
- Lee said a yield below 5% would be “really positive for risk-on” and argued that tech stocks and crypto are already anticipating easier financial conditions.
- The Bitmine chairman reiterated his forecast for the S&P 500 to reach roughly 8,200 to 8,400 by year-end while acknowledging the possibility of a mid-October-to-midterm correction.
- He added that Bitcoin's four-year cycle bottom is occurring now and expects Bitcoin to finish the year above $100,000.
Fundstrat's Tom Lee on Monday said he expects U.S. bond yields to “normalize” over the next six months as inflation pressures ease, adding that strength in technology stocks and crypto is already signaling easier financial conditions ahead.
“I think there are, over the next six months, softer readings on inflation,” Lee said in his interview with CNBC. According to him, that should allow the Federal Reserve to “walk back from its hawkishness,” and bond yields to “actually sort of normalize because the inflation uncertainty starts to ease.”
Lee said the 10-year Treasury yield could fall below 5% within six months. “I think anything under 5% would be interpreted by markets as really positive for risk-on,” he said.
U.S. equities were trading lower in pre-market trade on Monday. The SPDR S&P 500 ETF (SPY) fell 0.12%, the SPDR Dow Jones Industrial Average ETF (DIA) slipped 0.011%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) moved 0.19% lower. Retail sentiment around SPY on Stocktwits shifted to ‘bullish’ from ‘extremely bullish’ over the past day.
Tom Lee Sees 10-Year Yield Falling Below 5%
Lee's outlook comes with Treasury yields still elevated and investors watching the Fed for signs that its rate stance could change.
He pointed to market leadership as evidence investors are anticipating a shift in monetary conditions. “Tech stocks are making new highs and crypto is doing so well,” Lee said. “These can’t do well in the face of tightening monetary conditions, so I think that they’re anticipating easier financial conditions ahead.”
Lee Says Earnings Growth Is Making Stocks Cheaper
Lee added that he remains bullish on equities, citing that accelerating earnings growth has made the market less expensive despite its gains this year. “Even Q3 earnings are probably going to come in at almost 30% growth,” he said, adding that EPS revisions for 2027 earnings are up more than 20% since the start of the year.
“The S&P is not even up 20%, so the multiple actually has come down,” Lee said. “If someone is thinking the market was expensive at the start of the year, it’s actually gotten cheaper.”
Lee reiterated his forecast of the S&P 500 reaching roughly 8,200 to 8,400 by year-end, while acknowledging that a correction between mid-October and the midterm elections remains possible.
Tom Lee Sees Bitcoin, Ethereum Leading Risk-On Move
On crypto, Lee said Bitcoin’s (BTC) four-year cycle bottom is here and predicted it will close above $100,000 this year. He also expects Ethereum (ETH) to reclaim its previous high of just under $5,000.
“Bitcoin and crypto generally lead the stock market,” Lee said, calling crypto’s third-quarter resilience a leading indicator for what he expects to be a “pretty explosive” fourth quarter for stocks.
Bitcoin’s price edged 0.8% higher in the last 24 hours to trade at around $85,900 at the time of writing, paring gains after coming just $500 shy of its September high of around $87,400. On Stocktwits, retail sentiment around Bitcoin rose to ‘neutral’ from ‘bearish’ territory over the past day.
Meanwhile, Ethereum’s price moved around 0.4% higher, trading range-bound at about $2,700. Retail sentiment also improved to ‘neutral’ from ‘bearish’ over the past day.
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