EddieJayonCrypto
19 May 25
Fundstrat’s head of research, Tom Lee, views Monday’s stock pullback as a buying opportunity despite economic concerns and Moody’s recent downgrade of the US credit rating from AAA to AA1. Lee argues the downgrade is not a new signal, as markets have already priced in the US losing its triple-A stat...
Fundstrat’s head of research, Tom Lee, views Monday’s stock pullback as a buying opportunity despite Moody’s recent downgrade of the US credit rating from AAA to AA1. Lee argues that the downgrade is not a new signal since the market has already priced in the US losing its triple-A status. He highlights that Treasury bond auctions remain successful, indicating continued investor confidence in the US economy.
Lee explains that while the US faces an unsustainable debt challenge, a true warning sign would be a failed Treasury auction, which has not occurred. He believes the downgrade itself does not carry much signal impact for the markets. Lee anticipates that the current stock pullback will be shallow and may even close positive, as many investors who were caught off guard by the market recovery since April's severe correction are likely to reenter the market from the sidelines.
According to Lee, a significant amount, approximately $7 trillion, is sitting in cash on the sidelines, coupled with widespread skepticism from institutional clients and investors betting outside the US. This combination sets the stage for potential buying momentum and market gains heading toward year-end, especially if the market remains above its 200-day moving average, signaling an impulsive buying phase. Lee stresses that investors who are currently flat on their holdings may actually be underinvested given this environment.