Fundstrat Head of Research Tom Lee said Thursday that investors likely overreacted to this week’s Federal Reserve meeting, but warned that market conditions could shift abruptly later this year and "feel very much like a bear market." Speaking on CNBC’s Closing Bell, Lee said markets may have misread comments from Federal Reserve Chair Kevin Warsh as overly hawkish.
"…we still believe later this year there is going to be an abrupt change of market conditions, one that feels very much like a bear market," Lee said.
"But we don’t want to stand and call a top." Lee said Warsh’s communication style differs significantly from previous Fed leadership and argued investors interpreted the removal of forward guidance and the dot plot too aggressively.
Forward guidance refers to the Fed’s communication about the likely future path of interest rates, which markets closely watch for policy clues.
"I think the markets took the removal of that forward guidance and even looking at those dot plots as a hawkish pivot," Lee said.
