Tom Lee Warns Of ‘Inflation Shock’ But Sees Crypto, Energy, Magnificent 7 On Track To Hit Record Highs

• According to Tom Lee,  cryptocurrencies, particularly Ethereum, along with energy, large-cap tech, software, and financials, are set to lead the market higher.
• Lee said widespread market repositioning has already occurred during the war, with much of the S&P 500 experiencing rolling declines.
• He warned that an ‘inflation shock’ could still impact markets, with uncertainty around its scale and timing.

Bitmine Immersion Technologies (BMNR) Chairman Tom Lee said stocks may be on track to revisit all-time highs, even as he warned that an ‘inflation shock’ could still hit the economy in the months ahead.

“I think the bottom is in,” Lee said in an interview with CNBC. “I think stocks are now in the process to go back to their all-time highs.”

When asked how he expects the proposed bull run to play out, Lee said cryptocurrency and Ethereum (ETH) – which is also the altcoin backing Bitmine’s digital asset treasury (DAT) strategy – have been the top-performing assets. 

Ethereum’s price dipped below $2,200 after falling 3.3% in the last 24 hours. On Stocktwits, retail sentiment around Ether remained in ‘neutral’ territory over the past day, accompanied by chatter at ‘high’ levels.

Meanwhile, BMNR’s stock traded flat in pre-market trade, with retail sentiment moving to ‘neutral’ from ‘bearish’ over the past day and chatter staying at ‘low’ levels.

On the equities side, he pointed to energy stocks, the Magnificent 7 , software, and financials to lead the market. In pre-market trade on Thursday, the Energy Select Sector SPDR Fund (XLE) and the Roundhill Magnificent Seven ETF (MAGS) moved higher, while the iShares Expanded Tech-Software Sector ETF (IGV) edged lower. 

Retail sentiment on Stocktwits around the MAGS on Stocktwits remained in ‘bullish’ territory over the past day, accompanied by ‘normal’ levels of chatter. Meanwhile, retail sentiment around IGV on Stocktwits improved to ‘neutral’ from ‘extremely bearish’ over the past day, and chatter increased to ‘high’ from ‘low’ levels. 

Retail sentiment around XLE also improved, but only to ‘bearish’ from ‘extremely bearish’ territory. Chatter remained at ‘normal’ levels. 

‘Inflation Shock’ Is Still In The Making, Says Tom Lee

Despite his constructive view on equities, Lee cautioned that inflation pressures have not fully worked through the system. “There’s still a shock rippling through the economy,” he said. “I think there’s an inflation shock still coming.”

He compared the potential impact to a wave, noting uncertainty around its magnitude and timing. “We just don’t know the amplitude,” Lee said, adding that markets may still need to adjust depending on how the shock develops.

According to him, the recent uncertainty caused by the U.S.-Iran war led alot of market repositioning. “Something like 70% of the S&P has been through a rolling bear market. The summer lull won’t be as deep,” Lee stated.

The Commerce Department on Thursday reported that the Personal Consumption Expenditures (PCE) Index, which is the Federal Reserve’s preferred gauge of inflation, moved 2.8% higher in February on an annualized basis, in line with forecasts.

Read also: Bitcoin ETF Bleed Continues: MSBT Fails To Reverse Flows Despite $31 Million Inflows On Debut

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