Zinger Key Points
- Tom Lee asserts that "the Trump trade is still intact," driven by deregulation, low taxes, and pro-business policies.
- Market optimism remains as dovish Federal Reserve policy and pro-growth Trump policies align with bullish investor sentiment.
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Tom Lee, head of research at Fundstrat Global Advisors on Tuesday optimism about the markets despite recent uncertainties, emphasizing that “the Trump trade is still intact.”
What Happened: Speaking on CNBC, Lee highlighted several factors that could drive a more bullish outlook in the coming weeks, including upcoming “clearing events” such as the announcement of the next Treasury Secretary and Nvidia's earnings report.
Lee noted that speculation over the Treasury Secretary appointment has created some market hesitation but expects clarity soon.
"As we remove uncertainty… it takes away some uncertainty and the Trump trade, I think, is still intact," he said.
He pointed to predictive markets like Polymarket, where frontrunners for the role have fluctuated, further fueling investor anticipation.
Lee also addressed the Federal Reserve’s position, noting that while recent remarks from Chair Jerome Powell signaled a slowdown in rate cuts, the overall trajectory remains dovish.
"If you look at December 2025… the number of implied cuts is still the same. I think he's dovish, he's just moving some of the timing," Lee explained.
From a technical perspective, Lee observed that major indices, including the NASDAQ and S&P 500, as tracked by the SPDR S&P 500 ETF Trust SPY, have pulled back to critical support levels, which could bolster further gains.
"The NASDAQ is on the support line, S&P did a 60% retrace of its recent rally, and small caps have held above their prior highs," he noted.
Nvidia Corp.’s NVDA upcoming earnings report is another potential turning point. "Markets get very hesitant in front of Nvidia's earnings," Lee said, adding, "Once that's behind us, we'll see demand is strong, and I think the market breathes a sigh of relief."
Lee outlined the key elements of what he calls “the Trump trade,” which has pushed Bitcoin BTC/USD higher, driven by expectations of deregulation, low taxes and pro-business policies.
"He likes easy money, he likes low regulation, he likes lower taxes. There's a lot more than a two-week rally in my view," Lee said.
However, Lee cautioned about challenges in the healthcare sector, pointing to potential spending cuts and policy changes under Robert F. Kennedy Jr. as potential head of Health and Human Services.
"It's going to be a tough period for visibility for healthcare… there are clouds, but still opportunities, probably in biotechs," he explained.
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