“Trump Trade” Still Intact, Says Tom Lee, Amid Market Optimism

• Tom Lee says the “Trump Trade” remains intact due to market optimism and supportive policies.
• Federal Reserve’s potential slowdown in rate hikes could act as a “bullish clearing event.”
• Major indices, including NASDAQ and S&P 500, show resilience amid market “course-correcting” phases.
• Pro-market policies like deregulation and lower taxes could boost small caps and financial sectors.

According to Tom Lee, head of research at Fundstrat, the “Trump Trade” remains robust, supported by market optimism and several economic factors. In a recent interview with CNBC, Lee shared his perspective on market dynamics as year-end approaches. 

“As we remove uncertainty, it may not be announced in the next week or so,” Lee said, “The Trump Trade is still intact,” he added. 

Trump Trade: Market’s Reaction to Federal Reserve’s Plans

Image from Economic Times

Lee highlighted that Federal Reserve Chair Jerome Powell’s comments about potentially slowing rate hikes influenced market movements last week. “Last week, markets were surprised when Chair Powell said he might slow things down for December,” Lee said. However, he assured me that the outlook remains steady. “If you look at December 2025, a year from now, the number of implied cuts is the same.”

So, this suggests that long-term projections remain consistent although immediate changes might not occur. Thus, such clarity, Lee believes, could act as a “bullish clearing event” once uncertainties subside.

Trump Trade: Indices Show Resilience

Discussing major market indices, Lee pointed out their resilience. “Most of the major indices have pulled back to what would be viewed as support,” he noted. So, he mentioned the NASDAQ resting on a support line, the S&P 500 undergoing a retracement, and small caps holding above bullish levels.

So, this correction aligns with what Lee described as a market “course-correcting” phase, potentially setting the stage for further growth.

Factors Driving the “Trump Trade”

Image from KFF

Lee identified several factors fueling the “Trump Trade,” such as pro-market policies, deregulation, lower taxes, and reduced healthcare spending. “He likes easy money, low regulation, and lower taxes,” Lee said, referring to investor sentiment around these policies. 

Furthermore, he elaborated on potential cuts to healthcare and industries under the banner of “government efficiency.” According to Lee, these measures could boost specific sectors. “More deregulation could benefit small caps and financials,” he added. 

The Healthcare Sector Faces Challenges

Lee also touched on challenges in the healthcare sector. “It will be a tough period for visibility for healthcare,” he noted. These factors, coupled with political uncertainties involving figures like RFK Jr., contribute to a complex landscape for healthcare investors.

Despite these hurdles, Lee is optimistic about the broader market trajectory. So, he suggested that once these issues clear up, demand could strengthen across various sectors.

Conclusion

Tom Lee is optimistic about the markets. He claims that the “Trump Trade” remains intact, driven by supportive policies and resilient indices. 

According to Lee, sectors like healthcare can look forward to potential bullish events as uncertainties clear, offering opportunities for growth in small caps, financials, and beyond. “Once we get that behind us, demand will be strong,” Lee concluded. 

CNBC; Image source

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