Tom Lee has never been scared of big calls — but this one will ignite a few group chats on Wall Street. Speaking on CNBC's Squawk Box on Monday, the Fundstrat co-founder said the S&P 500 index is primed for a year-end melt-up, calling "7200–7300" not a hope, but "likely for December." And in case the tone wasn't clear enough, he delivered the most direct summary of his stance: "I'm pretty bullish."
What makes him so aggressive when sentiment feels exhausted?
Liquidity, capitulation, and a timing window, he believes, are what traders are sleepwalking through. Lee argues the single biggest market tailwind has already arrived: "today is the day that QT ends." With the Fed set to cut rates this month and balance-sheet tightening halting after nearly three years, he believes the liquidity surge could be explosive.
The last time QT paused — in 2019 — markets "within 3 weeks rallied 17%." That kind of move would land straight on top of the most-traded S&P 500 ETFs — the SPDR S&P 500 ETF (NYSE:SPY), the iShares S&P 500 ETF (NYSE:IVV), and the Vanguard S&P 500 ETF (NYSE:VOO) — the vehicles Wall Street uses when performance panic kicks in.
He also thinks November's washout was the best thing that could have happened. The market fell "6%," and the carnage hit AI and high-beta names even harder.
Behind closed doors, Lee says, institutional sentiment cracked — many fund managers "threw in the towel" and expected to coast into January. Now, if December turns strong, he expects a rush to avoid career-risk underperformance — classic "performance chasing," the type that can produce face-ripping moves in broad-market ETFs.
But there's one caveat: the Fed needs to avoid going too soft. As Lee warned, "the bond market will protest if the Fed is too dovish."
Investor takeaway: Bears say the rally died in November. Lee says the real move is about to start — and the finish line is far higher than anyone's ready for.