Tom Lee Warns Fed Rate Cut Cycle Clouds Equity Positions
Fundstrat Global Advisors’ research head Tom Lee warns that the Fed is restarting a mild Fed rate cut cycle, creating uncertainty around equity positioning. In the next 14 trading days, key US labor data, inflation gauges and the Fed’s rate decision will set the market tone. The S&P 500 recorded its weakest monthly gain since March and historically underperforms in September, while the VIX remains subdued. Lee forecasts a 5–10% pullback for the S&P this autumn followed by a rebound to 6800–7000, driven by Fed rate cut expectations. Crypto traders should brace for heightened short-term volatility but may benefit from the broader easing cycle.
Neutral
The Fed’s restart of a mild rate cut cycle usually supports risk assets including cryptocurrencies, but Tom Lee’s warning of a 5–10% pullback in equities introduces short-term uncertainty. Similar to mid-2019 rate cuts, markets may see an initial dip before rallying. For crypto traders, this suggests higher near-term volatility aligned with stock moves, yet longer-term easing could underpin a recovery. The mixed signals warrant a neutral stance.