Will Bitcoin surge past $100,000 by 2025? Discover why Co-Founder and Head of Research at Fundstrat Global, Tom Lee, believes now is the time to invest, his predictions on the market and Bitcoin’s future. In this episode of ‘Speak Up,’ Anthony Scaramucci sits down with Tom Lee, Co-Founder and Head of Research at Fundstrat Global. Tom shares his insights on the current economic climate, explores the potential for significant Fed rate cuts, and why he believes small cap stocks are set for a major rally. Lee also makes a bold prediction that Bitcoin could hit $100,000 by the end of the year. Fundstrat’s Tom Lee is one of the leading strategists on Wall Street and his famed Granny Shots stock list has outperformed the S&P by MORE than 100% since inception. Anyone interested in full access to Tom Lee’s institutional-grade research – including daily videos, market alerts, webinars, and fireside chats with CEOs and industry leaders – can sign up at fsinsight.com. Exclusive to Speak Up listeners, you can access all of Tom’s research at no cost for 30 days! Learn more here: https://bit.ly/speakup-tomlee
Tom Lee 0:00 I think that 100,000, or even higher is possible. You know, Bitcoin makes moves in very short periods of time. You know, we have published previously for many years showing that Bitcoin makes most of its gains in 10 trading days, if you look at percentage gain so you know those 10 days could all be in the second half of this year. Anthony Scaramucci 0:30 Hi, and welcome to speak up on the wealthion network. I'm your host Anthony Scaramucci. Today we are joined by a dear friend Tom Lee. Tom is the co founder and head of research for fun strat global. He's a financial analyst, a strategist, an investor, a businessman, an entrepreneur, but he's also a fortune teller. Okay, you just have to be you have to admit that about yourself, Tom, you are a fortune teller because you see the future before we do, which is why you're probably the most one of the most popular guests I've had on speak up. So let's start with your fortune telling skills. Talk about the economy. Where is it today? And where is it going Mr. Lee? Tom Lee 1:11 Thank you for having me Anthony. It's always great to have a conversation with you. So I'm glad to be here. In terms of the economy, I think the economy has defied the expectations of many because it remains pretty robust. You know, mainly because we haven't over invested capital in the private sector. You know, companies have been cautious the last couple of years. Because since 2021, the Fed has signaled its war to fight inflation. It kept a lot of companies from overspending on capex, but there is a recession in durable goods and an auto sales. And in housing. I mean, we saw that with existing home sales yesterday. I mean, they're just absolutely getting obliterated. And all of those three things in recession are really interest rate sensitive. So I think the economy probably is at a knife point where if the Fed begins to ease at the right time, and I don't know when that right time is, I think it staves off, what could be a larger softening economy, but there is softness. Anthony Scaramucci 2:19 Let's talk about it for a second, let's make you the Fed chair for a sec, would you be cutting rates now? Would you be waiting? I understand that they're fearful of going too early because of the inflation dynamic. But it seems like if they don't go soon, you're gonna have a steeper deeper recession than is necessary. So where would you pull the trigger? Tom Lee 2:42 Well, I agree with your last point, Anthony, I think waiting any longer really does risk what is a cascade effect. As things start to slow, you unravel things very quickly. So to me, if I was the Fed, I'd be a lot less concerned about a second wave of inflation, which is haunted many FOMC members, with the realization that the things that have been sticking on inflation like housing and auto insurance, they're finally turning and there's not a good re inflation cycle underway. So I would be cutting sooner. I mean, I think even the idea of a July cut makes sense. Anthony Scaramucci 3:22 But you're bullish. I mean, every time I see your interview, you know, you're one of the people in my life that I have on Google Alert. Okay, I think if you're talking I need to be listening. So when I hear your interviews, you're bullish. Why are you bullish? Tom Lee 3:37 Well, I'm bullish. Now. In fact, you know, I think today I would be buying small cap stocks pretty confidently. Because, one, I think that we are entering a growth scare because things are slowing. But to me, that's only a scare because they turn on a dime or inflect. As soon as the Fed starts cutting, you know, housing demand is going to come back big once people are confident that's going to cut commercial real estate finds its bottom etc. I think a second reason we're bullish is that when we speak to our institutional investors, and we have hundreds of institutional clients in 26 countries and we speak to them frequently, they're far more cautious, and far more skeptical of inflation, and I think had been more risk averse than we believe. And so when when when institutional managers are so cautious at a time when we're relatively optimistic versus consensus, that's also bullish. We also know there's a lot of cash on the sidelines, there's $6 trillion in money market balances. I mean, that's just a mountain of cash. Granted, it's earning 5%, but it won't earn that forever. And then, when we look at demographic trends, like millennials, I mean they are really entering the prime working years. So there's a lifecycle driver to their spending patterns. And I think there has been benefits from the the growth of immigrants in the US. I know it's it, we're seeing the liability side at the moment. But that, you know, that's a very large labor supply that keeps the labor market from overheating. So I think there's many reasons to be bullish. Anthony Scaramucci 5:21 Bill Dudley, the president of the Fed, the former president of the New York Fed, is out with an op ed today on Bloomberg saying that he got it wrong. He's changed his mind. He wants to cut rates immediately. Do you agree with him? Tom Lee 5:36 Yes, I've been following his comments, because he does. He is influential as a former member, and he has been one of those higher for longer, as you said, to inflect now and to call for cuts. To me that's appropriate. And I think it's a recognition. And he's one of the earlier pundits to recognize this is that there is a lot of softness out there. And if inflation isn't threatening, I'm not sure it makes sense to wait another eight weeks to actually cut rates. So it's, you know, it's a it's a pretty big air gap at the moment. And I think people get too caught up in the political noise thinking that this has anything to do with the election. Anthony Scaramucci 6:16 Would you cut 50 basis points? Tom Lee 6:22 I think the Fed could even signal that September is a definite cut date. And if it even if it's just one this year, I think it really reverses a lot of the softness, because the markets would take that cue from there and pricing, a series of future cuts, which is really the market sort of has a lot of skepticism about how much cutting the Fed might actually do. But yeah, I would do at least 25 in July. Anthony Scaramucci 6:49 All right, so 25 in July, Is it crazy to get more than one cut this year. Tom Lee 6:58 Markets are pricing in 2.8 cuts, so almost three cuts this year. To me, the drop in core inflation justifies far more cuts from the Fed, because you know, if we think of core PCE running it to six right now, and fed funds are at five, three, that's 2.7 percentage points or real rates. I mean, that's a that's a penalty rate. I mean, that's the rate that you want to choke off the economy. And it's been in place for more than a year now. So three cuts would only take it down 75 basis points, I think that there's a chance that there'll be more than three cuts this year. But even three cuts would be very beneficial. Anthony Scaramucci 7:45 I've read somewhere that you think that the markets could triple by 2030. We're, we're halfway through 2024. So you see a triple in five and a half years. So I had that writer that was that a mystery somewhere? Tom Lee 8:00 Ah, no, it's not a mystery. What we were citing is the the type of cycle that typically happens due to population searches. So we have a surge and people, number of people aged 30 to 50. underway, it actually inflected starting in 2016. And it's going to continue well into the 2030s. Okay, so there is a reversal of like what I call the prime age workforce growth, it's actually declining everywhere in the world, but the US where it's actually beginning to rise. And since 1870, I know it's pretty far back, but you can get pretty good data, especially post 1900, about how risk assets perform when there's a growth in in the number of people of prime working age. And it's actually highly associated with equity returns accelerating. And it's a it's multiple effects. But think of it as when when the number of people aged 50 starts to grow, they're spending more money, they're having kids, they're saving more, they're entering the prime work years, well, then they're buying stocks. And if the cycle plays out, equity returns should compound at high teens into the end of this decade. And teens, which would be you know, 15% from earnings, and then let's say three or four percentage points from PE expansion per year, you'd get to the s&p 15,000. Anthony Scaramucci 9:31 I'm personally worried about the debt situation in the US. And I think that would hold us back from your prediction. So tell me what I've got wrong about that. And are you or are you not worried about the debt situation and the spiraling of these interest rate expenses that the United States is going to be saddled with? Tom Lee 9:54 Yeah, it is a problem. I mean, the private sector has have been very, very smart about their balance sheets, it's really the public sector that hasn't been smart with the balance sheets. And you're right. The deficits that we have today are only solved by one of two ways. Either real growth is strong. And so as you know, real growth grows and tax rates are marginal. So we get we fixed the deficit through growth, or we have a huge deflation of the dollar. And in that case, of course, if that's the is how it's resolved, you really want to own something that's not dollar denominated. And it could be equities, but very likely, it should be something like Bitcoin or gold. Anthony Scaramucci 10:44 Okay, so let's talk about that Bitcoin has done great this year is up 50% of the ETFs. You see this cascade of money, this waterfall of money, exactly as you predicted. The halving happened. And so for those listeners who may not know what bitcoin does, in terms of the network, the network spits out about 900 coins a day, and then sometime in April, it cut that coin distribution in half to 450 coins a day. So the less supply you would think would move the price. The price has more or less been treading water here. You've got overhang issues, you had the supply, onboarding of the government of Germany, you've got the mount Gox issue. Tell us about Bitcoin here. Are you still as bullish as you were? And what do you think happens? A Bitcoin by the end of the year? Tom Lee 11:41 Yeah, we're still bullish on Bitcoin. You know, bitcoins become an asset class. Now, you know, it's now supported by a growing financial infrastructure, including Blackrock I mean, you know, when you get the Blackrock validating that as an asset class, you know, it's it's not even close to being a flash in the pan. And I think many people forget that. This is more of a signal of how much this asset class will grow over time. Because when institutions got into private equity, or venture capital as asset classes, something, you know, really well, Anthony, that signaled, you know, a decade, multi decade period where institutional sponsorship and ownership would grow. So I think we're only in the early stages of where demand is coming from a new source for Bitcoin that hadn't existed, really, since the first Satoshi was minted. And so I think that Bitcoin, unfortunately, is affected by it's a hyper volatile asset. So it's affected by supply perceptions, not just demand perceptions. And on the supply side, you're exactly right. Mt. Gox, is finally being resolved. That's really been one of the biggest expected overhangs since the since the original hack. And so when the distribution, which is in July when that's behind us, and markets see that there hasn't been cataclysm, I think that's going to be a case for why Bitcoin does really well, in the second half the Germany distribution, you know, that that's very strange timing, but that's already behind us now. And I'd say the only thing that I think would hurt Krypto is that it's still correlated, and viewed as a risk on assets. So if the Fed is somehow unexpectedly tight, I think it would act as a headwind. But if the Fed starts cutting, I think you're gonna see a move in Bitcoin that would correlate to what small caps would be doing as well, there's a lot of things correlated to a Fed starting a cutting cycle. Anthony Scaramucci 13:42 So 100,000 By the end of the year, is that possible? Tom Lee 13:45 Yeah, I think that 100,000 Or even higher as possible, you know, Bitcoin makes moves in very short periods of time, you know, we have published previously, for many years showing that Bitcoin makes most of its gains in 10 trading days, if you look at percentage gains, so you know, those 10 days could all be in the second half of this year. Anthony Scaramucci 14:09 So it's a it's an interesting time, because, as you and I both know, the market climbs a wall of worry, we have the debt crisis. We have wars going on one in Gaza, one in the Ukraine. We have the uncertainty of about a presidential election. So So map out for us the geopolitical landscape. How does it impact your analytical decision making related to the market? What do you think happens geopolitically. Tom Lee 14:37 Politics, geopolitics, elections really weigh on market short term because it has an impact on how our clients perceive risk. You know, if the election outcome is uncertain, if there's gonna be a disputed election, that affects how investors want to put capital work if they think that there is a risk, a tail risk of world war three, or broadening conflicts that that affects them. And so my best observation is, these things clearly cause risk appetite to, to to be suppressed and peak. You know, that's why we have corrections. But I don't think it actually affects the long term outlook. So for for the listeners, they may not agree with this. You know, when the more talk you hear about a war or disputed elections, and it makes you nervous about stocks, and if stocks are down, that's actually for someone who has a two year horizon or one year, I mean, it's, it's giving you a gift to buy, to buy equities. Anthony Scaramucci 15:42 I think it's an interesting point, because that has been a 40 year observation by me. The press media punditry could make somebody nervous. But if they just stay disciplined in a warren buffett like manner, and continue to buy into equities buy into great assets, they were well rewarded. I'm gonna ask you make an election prediction, if you don't mind because you are a future guru. So what do you think happens? Tom Lee 16:12 I'm gonna start with where market pricing is, yeah, the markets are priced in a Trump White House. And that that move came quickly after the debates. But to me, I think that the chances of Kamala Harris winning the White House are probably far greater because it I think that there is overtures being made by large companies towards the Democratic Party. And I think the polling is not very trustworthy in this day of cell phones, I think that her chances are far better than markets have priced. Anthony Scaramucci 16:52 Okay, so I want to stop you right there because the predictive markets or sort of 6238, meaning, you know, almost two thirds of the betters in like the poly market are predicted, or assuming is a Trump presidency. So you're making a contrarian call. You're saying, well, it may not be right. Tom Lee 17:13 That's right. Because, you know, Tom Bullock, who is our head of policy strategy says is that it's actually still early, you know, so it's only July and a lot can happen. And I think he's, he's right, because when I look at the past elections, a lot did happen between now and November. So I think it's early. I think some listeners might want to worry about what it means for sector implications. But I on that point, Anthony. Yes, I agree with the I, I actually think the betting markets are going to shift as we move into November. Anthony Scaramucci 17:48 Yeah. Well, listen, it's incredible to see, we incredible to see what happens. You're a lot of historic things going on at the same time. Are you surprised about the regulatory shift that seems to be going on in the United States related to digital assets and crypto, and I'm gonna state the following sentence, you tell me if it's true or false. I feel like the SEC has been badly bruised in these court cases. And the SEC has been badly bruised in a series of different things. And a result of which they're going to let up now. The combination of the pro crypto stance of Donald Trump the potential of somebody like vice president Harris speaking at the Bitcoin Conference, I feel like they are in retrenchment related to the war on crypto, do I have that wrong? Tom Lee 18:42 I think you're, I think your observation is correct. You know, if we look at how the SEC historically handled, you know, what kind of hand the SEC used when, you know, making enforcement actions, they typically used to just sort of say what's not allowed, but they didn't say what is allowed. So in other words, they didn't use a super heavy hand. And they'd let base basically quasi private sector or, you know, active quasi regulatory arms. And in crypto, I think it has been a different experience where the SEC has been very explicit on what they're allowing and what they're not allowing and how they're viewing things. And I think you're right, I think now it's there's a shift towards them viewing crypto and regulating in a way they traditionally did and that's with a lighter hand and I think that would be positive and you're right, maybe the catalyst there has been some of the bruising they've taken. Anthony Scaramucci 19:40 We get a Solana ETF someday? Tom Lee 19:44 I think there'd be a lot of demand for it. Because as you as you know, there's huge community support for Solana and and it's been a it is a very robust network, but it really has a vibrant community. So but as you know, it's, uh, it is in the hands of how regulators would see it. But yes, I think it would, you know, I think it would be very popular. I think there'd be a lot of investors. I mean, we get asked a lot, you know, how do they buy Solana because they don't necessarily want to have to actually go into an exchange and, and coke or anything? Anthony Scaramucci 20:18 No, it's interesting. Your actionable idea, right this second, I said, Okay, Tom, I got money I gotta put to work. What am I doing with it? Tom Lee 20:29 If I had woken up, and and today was the first day I'm buying exposure to anything, and I want to own something that we think is compelling near term. To us, that'd be small catch, you know, we've written for several weeks now that we think this is the summer of small cap stocks to rally. There's many reasons for it. But mainly, there's two reasons. First, is if the Fed begins a, an easing cycle, it takes enormous pressure off all of the constituents within small caps, you know, from regional banks, to commercial real estate to biotech, which is, you know, harmed by high cost of capital. And, in historically, that would also coincide with what small caps should do near a cutting cycle. Small caps also benefit if there is a Trump White House, it doesn't have to be both, but it's the same drivers that you'd have, you know, deregulation, potential mergers, easing cost of capital. So we think the period for small caps right now looks a lot like the October to December of last year, and that was a eight week 27% rally, we think this is going to be larger, because small caps have a larger short position, you know, whether you look at Russell 2000, Futures, or the percentage of active managers that are actually allocated to small caps, or even just sentiment from our own clients who've really, essentially largely wrote off small caps from the start of the year thinking no one's ever gonna care about them again. Anthony Scaramucci 22:07 You know, I love the advice. So we're going to take some listener and viewer questions. Okay, so we're gonna populate here a small investor who wants exposure to gold? Would you recommend buying physical gold or the gold ETF This is Mark, from Springfield, Illinois. Tom Lee 22:24 Mark, my advice may not be what your advisor might tell you, but I would buy a little bit of both, I think owning an asset and giving you conviction means you have to really understand it. That's how you can you know, that's how people can hold on to Tesla for years or Nvidia. And if you're going to make a bet on gold, buying some physical gold would really help you understand what it means to own something that's not $1 asset. So I'd recommend owning some physical gold and the gold ETF. Anthony Scaramucci 22:52 I would say to people is that we have a relationship, one of our partners is hard asset Alliance. So if you're buying gold, and hoard assets, think of them. Alright, let's fire in another one. I have a client that's going to pay me $50,000 upfront for a product that I'm buying on a 30 day term. What can I do with this cash for 30 days to make interest? This is Cheryl from Florida. Tom Lee 23:23 Cheryl, you know, the money that you're getting upfront, has a use that has to be used in 30 days, so you can't do anything that would tie up your money, or risk losing principal. So you the only thing you can really do is buy a 30 day CD to earn some interest or put it into a high yield money market fund. But the amount of interest you can earn is is not as much as you think if they're paying you 5% You have to pay take 5% divided by 12. So it's really 112th of 5%. Anthony Scaramucci 24:00 All right, so you got a you got to be careful out there. I think that's basically the message Cheryl, from Tom and I just Just be cautious. You know, I'll tell a quick story down and think it's instructive as in 2008, a money market group came to see me they were offering me 60 basis points more than what I was getting in my money market account at JP Morgan. And I said, I'm okay. I like JP Morgan. Anyway, that that account broke and the dollar got busted in the 2008 financial crisis and so just be careful out there with your cash. That's my that's my advice. Let's go to the next one. I keep hearing about rolling over a 401 K to an IRA to save on taxes. Can you explain? This is Noah from Chicago. Tom Lee 24:49 Well, Noah, Anthony probably can give you same advice. But I believe if you're leaving a job that's why You're asking this question. That's when people have their 401k in a company. And then they can either leave it in a company or take it with them and roll it into an account. But that account has to be a similar tax structure. That's why people do a rollover IRA. And that's what happens if you take your money from your 401 K, when you leave a company, you actually are taxed pretty heavily. I believe that there is even an early withdrawal tax. So I think you're really wise not to try to take the money out of a foreign key and actually roll it into a tax deferred account. Anthony Scaramucci 25:41 Let's go to the next one. Tom, you originally said bitcoins market cap? would trump jump to 110% to 16 trillion. So I think more or less as the market cap of gold, by the way. And so can you elaborate on that? That's Jamie, from Toronto. Tom Lee 26:00 Jamie, thanks for the question. Yeah, let me clarify that I was asked recently you know, some milestones and ways to think of bitcoins value. And one of the things that to me, is part of our framework is a gold coin is digital gold. And in a generation, many people are going to prefer to own Bitcoin over gold for a lot of practical reasons. Like it's it's lighter, easier to carry. And that means Bitcoin should have the same network value as gold, which is, as Anthony pointed out, that 16 trillion and at 21,000,000 bitcoins roughly 700,000. I don't think that's the cap for Bitcoin. You know, Bitcoin is a is a network value asset, with network effects, meaning is the number of people who own Bitcoin over time increases, and then the activity around it grows, the value should grow. So I wouldn't view 16 trillion as a cap for Bitcoin, but that's how we got the 16 trillion. Anthony Scaramucci 27:01 I think it's a really, really, yeah, something we believe as well. So I just want to point out, if it is an asset class, it's not going to trade with Nvidia or Apple is those are stocks, not asset classes, if it's an asset class is going to go to the levels that Tom is suggesting. Let's go to the next question. Looks like both presidential candidates are more crypto friendly. Do you think this opens the door? For more use cases? This is Phil from Cincinnati. Tom Lee 27:33 Phil, that's spot on, you know, as as something grows as an asset class grows in value, and it it it benefits from not only more liquidity but more acceptance. And there is definitely going to be a lot more use cases for crypto. Over time, and especially as you said, you know, the US has become a lot more crypto friendly. I think that the doors wide open for a lot of innovation because it's you know, there's many innovations that come from blockchain, including programmable money, programmable contracts, I mean, legal documents will likely be on blockchain in the future solely on the blockchain because of the security at there's so many future use cases. And I think that's why the future is quite bright. Anthony Scaramucci 28:24 All right. Well, we're out of questions. Mr. Lee, it's always a pleasure to have you on our show. Leave us with something leave us with something from the incredible brain of Tom Lee. Tom Lee 28:40 I guess I, you know, I guess I'd leave you some, some parting thoughts about the stock market? Because, you know, I found that many people are mystified about the stock market this year. They're saying, How can stocks go up when the Feds keeping interest rates so high? And I heard stocks are so expensive. How could you know they're at historic highs? I think that the market is telling us because the s&p is up 15% this year that a lot of the framework and perceptions that many people have may have may be wrong. For instance, you might think the stock market's expensive, but that's because there are seven stocks that have really strong top line growth growing 20% and earnings 40% that are trading at 27 times earnings. The median s&p stock is trading at 16 times PE. And that's basically in line with the 50 year average. The s&p is not expensive outside of the seven biggest stocks. And while many people think the Fed has been tight, they actually have been what they believe is neutral because they haven't been raised interest rates and markets are forward looking interest rates, markets have actually been expecting the Fed to cut. So the stock market has been able to rise because the bond market itself is anticipating the Fed to begin cuts, they can't make every equity trade. That's especially with a cut. Because until the Fed cut, you can't necessarily believe it. But broadly speaking, that the bond market has been supporting the stock market. So I don't think you should be as negative towards equities, as many of the pundits would have you believe. And even if you're worried about November, I do think it creates volatility, because we don't know who's going to be in the White House. But it shouldn't change how you view stocks in 2025. Anthony Scaramucci 30:46 Okay, I just want to point out to everybody that Tom is one of the leading strategists on Wall Street, is famed granny shot stock list has outperformed the s&p by more than 100% Since inception. If anybody is interested in full access to Tom Lee's institutional grade research, including daily videos, market alerts, webinars and fireside chats, with CEOs and industry leaders, you can sign up at f s insight.com. We'll put that in the chat. We'll make sure that that's a ribbon here. It's F S insight.com. Okay, exclusive to speak up listeners, you can access all of Tom's research at no cost for 30 days. That's very nice of you guys, and very generous of you guys. We're going to provide a promo link in this description below. So you'll see that promo link there. If you want to get involved with Tom's research. I think you're one of the more brilliant with it thinking about you, Tom is that you're brilliant, and you're incredibly nice. And so it's a it's an interesting combination that is often not found on Wall Street's only to God bless you keep up the great work and hope to see you live, but also back on speak up soon. Tom Lee 32:07 thank you. Anthony Scaramucci 32:08 If you like this video, you'll like this video as well. Check it out.