There's a lot to be optimistic about in 2026, says Fundstrat's Tom Lee

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Fundstrat 6.5
Market Research Firm
Tom Lee 9.0

There's a lot to be optimistic about in 2026, says Fundstrat's Tom Lee

metals

It does look like gold rallies typically lead Bitcoin rally. So I think it's been healthy for gold to rally. Links gold rally to dollar debasement and monetary easing, viewing it as a supportive environment for precious metals.

rut

It's healthy and it's important. the small caps made an all-time high last year... lower interest rates helps them monetary easing. earnings growth is starting to look better. Explicitly bullish on small caps, citing multiple tailwinds including lower rates, easing, earnings growth, and mergers. The Russell 2000 is the primary small-cap index.

Questions Tom Lee's 7700 S&P 500 target for end-2026 and associated 15-20% correction in second half.

speaker1
Tom Lee

Expects 2026 pattern similar to 2025: terrible start, then rally. Market will test the new Fed, causing fear, but there are optimistic factors: tariffs anniversary, Fed cutting, ISM potentially above 50.
Tom Lee

Optimistic about lagging groups like energy (top sector pick). Mag 7 should keep producing good earnings growth, alongside financials and small caps.
Asks if 7700 target is based on 10% earnings gain with stable multiple.

speaker1
Tom Lee

Thinks earnings will do even better and the multiple comes down because other sectors are re-rating, while Mag 7 tracks earnings growth, pulling overall P/E down.
Notes Lee is back predicting Bitcoin ($250K target) despite missing last year, and asks about divergence from gold/silver.

speaker1
Tom Lee

Acknowledges Bitcoin breaking its four-year cycle (should be down this year) but sees tailwinds: leverage reset Oct 10, institutional adoption, Wall Street blockchain products, US government support.
Tom Lee

Gold rallies typically lead Bitcoin rallies. Dollar debasement and monetary easing are supportive. Crypto adoption rates are low, offering exponential growth.
Asks if improving ISM is bullish for crypto.

speaker1
Tom Lee

Found copper-to-gold price ratio rise coincides with Bitcoin rallying. ISM moving from below 50 to its peak coincides with Bitcoin entering rally stage.
Asks for oil forecast, noting Venezuela and last year's confounding movement.

speaker1
Tom Lee

Technician Mark Newton thinks oil could see something like $40 early this year. That won't necessarily hurt stocks because equities have lagged. Majors should do well; energy stocks will start discounting higher oil even as oil gets to $40.
Asks if broadening into small caps/Russell continues and is necessary.

speaker1
Tom Lee

It's healthy and important. Small caps made all-time high last year. Lower rates, monetary easing, better earnings growth, and mergers are tailwinds. Small caps should have been tracking EM stocks which did well.

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