The head of research at Fundstrat, TOM LEE, has suggested that a de-escalation in the ongoing trade war between the United States and China could serve as a catalyst for a significant reversal in the stock market. In a recent interview with CNBC Television, Lee emphasized that cooling tariff negotiations between the two nations could reduce the likelihood of an economic recession.
“Markets have become very pessimistic, pricing in a 60% probability of a recession. If tariff negotiations de-escalate, that probability drops significantly, opening a large window for a market rebound. The key lies in the path of this de-escalation,” Lee stated.
Lee advised investors to closely monitor the developments in the US-China tariff dispute. He warned that if tariffs remain in place, it could spell trouble for the global economy. However, he expressed optimism that a de-escalation or a resolution—such as one nation making the first move—could lead to a positive turnaround for stocks.
“The US and China currently have absurd levels of reciprocal tariffs. If these persist, the global economy is in trouble, and a bearish outlook is justified. But if the situation de-escalates—which I believe is likely—the downside risk diminishes dramatically, and stocks could perform exceptionally well for the rest of the year,” Lee explained.