What does Tom Lee think about the next US stock market trend After reading the latest interview with Fundstrat founder Tom Lee, his views are still biased, but he also reminds us of several risks worth paying attention to. Why continue to watch more? 1. The true core of this bull market lies in the fact that corporate profits far exceed expectations Tom Lee believes that this round of price increase is not solely due to valuation expansion, but rather a continuous improvement in profitability. This earnings season, the S&P 500 EPS exceeded market expectations by more than $15. The EPS forecast for 2027 has been rapidly revised upwards to around $410, and with the end of the earnings season, there is still a chance to further increase it to $425. If profits continue to improve, it is not an exaggeration for S&P to rise from 7700 to 7900-8000. 2. The significant fluctuations in the past few weeks have cleaned up the market Tom Lee believes that high beta sectors such as AI, software, and cryptocurrency have undergone significant deleveraging recently. Although the process was painful, it also washed away a large amount of leveraged funds. Now the market has a healthier chip structure, with a large amount of cash still outside the market. Once the index continues to reach new highs, these funds are likely to re-enter the market. 3. This bull market is no longer just about AI Many people believe that only Mag7 is rising. But Tom Lee pointed out that the current rise has clearly spread: 1. Industrial stocks continue to hit new highs 2. Regional banks strengthen 3. The insurance sector has reached a new high 4. Consumption remains resilient 5. Small cap and mid cap stocks hit new highs simultaneously Even major markets such as the UK, Germany, France, Brazil, and Mexico are approaching historic highs. This round of rise has gradually spread from the AI leader to the entire market, and the market breadth is continuously improving. 4. The job market remains very healthy The number of initial unemployment claims for two consecutive weeks has been below 200000. This means that there are no obvious signs of a recession in the US economy. As long as employment remains stable, there will be support for corporate profits. What does Tom Lee think is the biggest risk? He doesn't think we're going to enter a bear market right now. It should be noted that there may be a phased adjustment of about 10% later this year. The reason is not the deterioration of corporate profits, but the market's excessive sensitivity to inflation and Federal Reserve policies. If inflation recurs in the coming months, or if the market continues to speculate on the Fed's policies, it could trigger a broad de risking across the entire market. Tom Lee believes that in the past few months, there have been more rotations in high beta sectors such as AI, software, and encryption. The entire market has not yet experienced a truly comprehensive risk reduction. September may be a critical time window Tom Lee reminds that the biggest variable in the market currently comes from the Federal Reserve. Especially the Jackson Hole annual meeting at the end of August and the FOMC meeting in September. At present, there are still significant differences in the market regarding the policy path for September. Meanwhile, the newly appointed Federal Reserve Chairman Kevin Warsh is reducing forward guidance and no longer revealing too much policy direction to the market in advance, as he has in previous years. This communication method means that the future market may rely more on every economic data. The volatility may also be significantly higher than in the past few years. Tom Lee maintains a bullish view, believing that corporate profits are sufficient to support S&P's continued challenge to 8000 points. The real risk worth paying attention to is that the market may experience a phase adjustment of around 10% before and after the Jackson Hole at the end of August and the FOMC in September due to the repricing of Federal Reserve policies.