April's market wobble was 'an over reaction' to inflation data, says Fundstrat's Tom Lee

So if AI set to dominate and be the theme in the market for the next few days, could your money be at risk if NVIDIA pulls up lame? Let's talk about it with our friend Tom Lee. Fun Strap Managing Partner and Head of Research, CNBC contributor and a guide remained resolute and strong and long even when things were looking shaky a couple of weeks ago. Tom, maybe? What did you see that others missed? Well, you know, we're talking about why markets recovered. To us, the April wobble was really a market overreaction to a string of some inflationary data and then a fear that the Fed was going to turn hawkish and potentially raise rates. I think that that is pessimism really pushed to the extreme at a time when I didn't think markets were exhausted that a top wasn't in place. So to me it was a healthy pullback, but you know, it's it's been important to buy in Miami. The market's up 6% since then and there's still 6 trying to cash on the sidelines and you know, investors actually been pulling money out of stocks the last two weeks as well. Did we, did we overstate the importance of just one company, NVIDIA? We did not because as as you sort of set up, NVIDIA is really that one of the most important companies today because they are supplying a key piece of what is powering all of this innovation in AII mean everything else is really tagging along with actually the value creation because of NVIDIA chips. So it's an important company and important week. NVIDIA on Wednesday, if they come in a little weak, the stock's been weak. So it seems like the market is ratcheting down some of the expectations. So give us the scenarios Tom, if NVIDIA meets or you know misses or meets or has a giant beat, what do you think is the, the implication for the macro market? Well, you know it's it's going to obviously be a a disappointment and an A negative shock. If if NVIDIA meets, I mean misses expectations and you know they are very lofty expectations, I would think investors are going to be nervous. But ultimately it would be AI think a prelude to a market broadening because investors who own a lot of NVIDIA might want to look for other stocks that are starting to show promise. If NVIDIA beats expectations because I'm assuming you're going to ask me that, I think it's going to pull money off the sidelines and I think again it, it probably helps propel a broadening of this market rally. I mean, I think there have been other groups starting to participate like energy materials this week. Yeah. So but it would be better to see a beat than I miss. Yeah, I feel like energy. A lot of the, I mean you look at stocks like a Vistra. I'm not asking you to go into individual names, but a lot of these energy related stocks have soared because of AI because they know that the demand for power, literally electricity is going to soar so high if we actually do complete all these data centers that NVIDIA is helping to, you know, the chips to power all the AI revolution kind of runs through energy. What else though besides NVIDIA? Tom, right now I'm sure the Federal Reserve is on this list. What else matters most to you and Mark Newton and your team at Fun Strat for the macro market? Well, we're you know next week there is quite a lot of Fed speak including Powell speaking on Sunday, but it's a commitment, A commencement speech and there is some macro. I don't think it's going to be as central as NVIDIA, but you know we have the FOMC minutes on Wednesday and I think the other AI event next week is really Microsoft because they have something related to Surface on Monday and then they have the three day conference bill starting Tuesday. So it it really brings a lot of AI into focus. I I actually think a lot of smaller supporting and ancillary like edge companies that do AI are going to do well next week because of those events. Yeah, I mean truly next week you got, we just showed the Federal Reserve meeting dates. Last question, Tom, where do you fall in that? I mean it's been up and down. We started the year with what six rate cut expectations that's toast. I don't think we'll get one. Do you think we'll get any? I I think how many cuts we get really depends on how much progress we make on inflation and hopefully a job market that doesn't stay red hot. I think it's been good to see the job market cooling and and inflation. I think it's the the components are moving the right direction. So I'm more optimistic that we'll see more than two cuts, which is what's being priced into markets today.