Fundstrat’s Tom Lee: Resolution of Tariff War Could Create Positive Setup for Financial Markets
Fundstrat’s head of research, Tom Lee, believes that a resolution of President Trump’s tariff war could have a positive impact on financial markets. In a recent interview on CNBC, Lee stated that despite the media headlines, the threat of tariffs may have already had its effect on the financial landscape, with most of the damage already being done.
Historical Precedent
Lee referenced the stock market correction of 1962 during the Cuban Missile Crisis as a historical precedent. He pointed out that markets bottomed out before the actual resolution of the crisis occurred. Lee expressed optimism about the potential outcome of the tariff situation, stating, “I think markets should interpret it positively because I think when we talk to our clients, many are viewing tariffs as punitive, potentially protectionist and driving several economies into recession. This sounds like we could actually have a positive-case scenario with these tariffs. One that’s either mutually agreed upon or reciprocal, but maybe a good deal for businesses and I think it would set the stage for a much bigger recovery rally than we expect…”
Market Behavior
Lee also highlighted the fact that markets have historically bottomed out before significant events take place, using the Cuban Missile Crisis as an example. He mentioned, “We still have eight trading days till April 2nd. Most investors are getting just nauseous from the volatility so they want to throw in the towel but we also know that markets will bottom or have historically bottomed before the event actually happens. The best example is the Cuban Missile Crisis in 1962. That was a 12-day crisis. The stock market bottomed seven days into that crisis and recovered two-thirds of the losses before the resolution. So I think that’s a decent template for today.”
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