Good Evening:

“You look at every bear market and they’ve always basically occurred because of an uptick in inflation and an uptick in interest rates.” – Paul Tudor Jones

The correction we’ve experienced this year fits Mr. Jones’ sentiment. Still, the enduring questions on the Street remain: What’s the Fed’s next move, and have we bottomed? Our Tom Lee and Mark Newton think we probably have after the S&P 500 rallied 10% from its lows as of Thursday, with a fresh wave of bullish momentum. Many of the factors that have added to volatility this year are old news, and the market might look forward from here. Signs of inflation peaking can allow for flexibility in Fed policy, with better-than-expected macro data supporting a sustained move higher in stocks.

“Everyone I talk to is pretty worried about markets,” Lee, our head of research, said this week. “They're just worried because there's still this issue of, 'The Fed must crush inflation.' But I think the key to watch is FAANG, and I think FAANG is better. We're still stuck in the same place, but I think the risk/reward improved a lot. Whatever the Fed's done, coupled with the market's reaction, is already achieving a slowdown. The labor market is a lot softer than it appears. I think inf...

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