Fundstrat head of research Tom Lee says the recent weakness in one stock sector is reflecting US policy pressure rather than deteriorating fundamentals.
In a new CNBC interview, Lee says financials have been caught in the crosscurrents of Washington policy aimed at easing consumer costs, even as underlying business conditions remain strong.
“I think the financials are being buffeted because the White House is choosing winners and losers. And right now, they want to reduce the burden on consumers by potentially capping credit card rates and maybe making it harder for institutional buying of homes. So I think this is hurting the banks to an extent.”
Lee says the recent correction in banking names is an opportunity to load up on weakness, believing that AI and blockchain are poised to send the sector higher.
“But the bank fundamentals are so good, and I think tokenization and blockchain are really big productivity drivers, and AI is a huge tailwind that I think banks are in the process of re-rating more like tech stocks over time. So, I mean, I would use any weakness to buy them.”
Turning to metals, Lee says it is unwise for investors to jump in now, as he says the commodities appear to be in the late stages of the rally. But he notes that jumping ship for those who got in early is also not the best move, believing that the rallies could extend beyond expectations.
“When you look at extensions like this, it’s dangerous to fade it because you don’t know how long it will go, but you’re right, a parabolic move probably marks the end of the move, not the beginning of the move, so it’s a good question of like timing.”
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