Asking if Tom Lee thinks the S&P is going to 7300 in the near term and if we're witnessing a slow turnaround for stocks.
Scott
Tom Lee
Stocks took hits from software downturn, rotation out of Mag 7 into AI bullet makers, and risk-off as gold surged. Earnings have been solid, economic reports good, and positioning is risk-off enough to climb in a labored way towards 7300.
Asking if the market is appreciating how strong earnings season has been.
Scott
Tom Lee
Stocks haven't reflected the huge earnings beats, though it has shown up in small caps.
Noting the disconnect between strong double-digit earnings growth narrative and recent volatile chop in the market.
Scott
Tom Lee
Earnings are good, but multiples have been affected by AI, potential new Fed chair, and potential war. The fundamental anchoring is good, so stocks will eventually re-anchor and go higher.
Asking about three key trades: rotation back to Mag 7, software bottom (IGV), and crypto bottom, and if they have happened yet.
Scott
Tom Lee
Not yet, but maybe 90% of the way through. Positioning data shows software ownership at multi-decade lows, Mag 7 are at a 3 PE point discount to bullet makers (unprecedented in 10 years), and crypto drawdowns are 80% of past crypto winters. These are setting up to be big trades that may lead the market.
Asking if Nvidia earnings next week holds the key, given AI spend fears.
Scott
Tom Lee
Nvidia earnings could set the bottom. The software index is in its eighth week of a severe downturn; sometimes the ninth week is a turning point that could mark the bottom for software.