- The inventory market’s trajectory throughout the Cuban Missile Disaster may present a template for the way buyers will reply to President Donald Trump’s upcoming reciprocal tariffs, in accordance with Fundstrat World Advisors cofounder Tom Lee, who has a robust current monitor report of inventory market forecasts.
An awesome sense of dread has settled over buyers as they brace for the subsequent salvo of tariffs from President Donald Trump, however the Cuban Missile Disaster may supply a roadmap for an enormous rebound, a high Wall Avenue strategist mentioned.
Fundstrat World Advisors cofounder Tom Lee, who has a sturdy current monitor report of inventory market forecasts, informed 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 strategy which may set off some reduction.
“This feels 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 an excellent deal for companies,” Lee mentioned. “And I feel it will stage set the stage for a a lot larger restoration rally than we count on.”
He drew a parallel between the Cuban Missile Disaster, which almost triggered a nuclear warfare between the US and Soviet Union, and at the moment’s state of affairs.
The Chilly Warfare 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 the moment,” he mentioned.
Probably including some reduction over reciprocal tariffs, Bloomberg reported this weekend that they’re shaping as much as be extra centered than a sprawling, international onslaught.
In the meantime, high buyers like Cathie Wooden and others on Wall Avenue are warning of a recession. However Lee argued the market is not signaling one, saying buyers 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 we have now to remember is that this commerce deal, if it is acceptable, may really mainly kind of blunt this entire challenge of commerce sooner or later,” he added. “And it will really make the US extra engaging once more.”
Earlier this month, Lee provided a equally bullish inventory market outlook, predicting a ten%-15% leap this spring after indexes hit correction territory on fears that an escalating commerce warfare would kill development.
Shares continued to drop over the subsequent 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 good points 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 rising indicators of that we have really established a tradable backside,” Lee mentioned on Thursday.
This story was initially featured on Fortune.com
