- The inventory market’s trajectory through the Cuban Missile Disaster may present a template for a way traders will reply to President Donald Trump’s upcoming reciprocal tariffs, in accordance with Fundstrat International Advisors cofounder Tom Lee, who has a powerful current monitor document of inventory market forecasts.
An amazing sense of dread has settled over traders as they brace for the following salvo of tariffs from President Donald Trump, however the Cuban Missile Disaster may supply a roadmap for an enormous rebound, a high Wall Road strategist stated.
Fundstrat International Advisors cofounder Tom Lee, who has a robust current monitor document of inventory market forecasts, instructed CNBC on Friday that his shoppers predict punitive tariffs that may drive a number of economies into recession.
However Trump’s suggestion that he’ll present “flexibility” together with his reciprocal tariffs, that are due on April 2, may point out a much less extreme method that may set off some reduction.
“This appears like that we may even have a positive-case situation with these tariffs, one which’s both mutually agreed upon or if it is reciprocal possibly a superb deal for companies,” Lee stated. “And I feel it might stage set the stage for a a lot larger restoration rally than we anticipate.”
He drew a parallel between the Cuban Missile Disaster, which almost triggered a nuclear conflict between the US and Soviet Union, and at present’s scenario.
The Chilly Conflict standoff was ultimately resolved by President John F. Kennedy and Soviet chief Nikita Khrushchev after they agreed to withdraw nuclear missiles from Turkey and Cuba, respectively.
Lee identified that the US inventory market bottomed seven days into that two-week disaster in October 1962, and recouped most of its losses earlier than the precise decision.
“So I feel that is a good template for at present,” he stated.
Doubtlessly including some reduction over reciprocal tariffs, Bloomberg reported this weekend that they’re shaping as much as be extra targeted than a sprawling, international onslaught.
In the meantime, high traders like Cathie Wooden and others on Wall Road are warning of a recession. However Lee argued the market is not signaling one, saying traders are extra paralyzed than pessimistic, and a giant inventory rally after April 2 may even assist stave off a downturn.
“One of many issues that now we have to remember is that this commerce deal, if it is acceptable, may truly mainly kind of blunt this complete concern of commerce sooner or later,” he added. “And it might truly make the US extra enticing once more.”
Earlier this month, Lee provided a equally bullish inventory market outlook, predicting a ten%-15% bounce this spring after indexes hit correction territory on fears that an escalating commerce conflict would kill progress.
Shares continued to drop over the following a number of days after his prediction, however have since mounted considerably of a comeback.
After hitting lows on March 12, the S&P 500 and Nasdaq have each climbed about 3%. Final week additionally noticed shares notch their first weekly positive aspects after 4 consecutive declines, helped by Fed Chair Jerome Powell’s usually dovish tone Wednesday, when the central financial institution stored charges regular.
“There are growing indicators of that we have truly established a tradable backside,” Lee stated on Thursday.
This story was initially featured on Fortune.com
