Fundstrat
Fundstrat’s Tom Lee: Why the S&P 500 Could Hit 7,000 & What’s Next for Crypto
10/17/2025, 8:35:41 PM
Economic Summary
- Opacity in private credit is creating investor caution; if flows into private credit slow, alternatives allocations could be repriced and hit markets.
- There is strong AI-driven demand and substantial cash on the sidelines, which may catalyze a chase into equities and multiple expansion.
- Many institutional investors are underperforming (only ~22% beating benchmarks), increasing the likelihood of catch-up buying into winners.
- The speaker expects Fed easing after an extended pause, making a mid-to-high single digit Q4 rally plausible, with 5% as a base case and 7–10% possible.
- Earnings season has started well: banks reported strong results and about 82% of companies are beating, improving near-term corporate visibility.
- Small caps are highlighted as having strong earnings growth (cited ~48% in Q3), suggesting they could outperform the broader market.
Bullish
- AI demand accelerating could drive equity flows.
- Large cash balances and poor institutional performance could fuel a chase into stocks.
- Fed easing after an extended pause should support a year-end rally.
- Regional banks and small caps look oversold with strong earnings growth.
Bearish
- Opacity in private credit could cause capital flow disruption and investor caution.
- Trade tensions and VIX spikes may trigger volatility and further deleveraging.
- Continued issues in private credit or leveraged loans could meaningfully hurt stocks.
People mentioned
ScottJamie DimonSteve LeasemanAdamTom Lee