. THE S&P ON TRACK FOR ITS WORST WEEKLY LOSS BUT TOM LEE SAYS IT'S TEMPORARY MOMENT OF PAIN AND BUY THE DIP OPPORTUNITY. HE JOINS ME NOW TO MAKE THAT CASE. GOOD TO SEE YOU AGAIN. GLAD YOUR A HERE IN PERSON. YOU DON'T THINK MUCH CHANGED THIS WEEK? >> I THINK THE NARRATIVE GOT MUDDLED BECAUSE THAT CPI REPORT WAS A DISAPPOINTMENT, BUT IT WAS DRIVEN BY WHAT WE CALL STUBBORN COMPONENTS, SHELTER, AUTO INSURANCE. THE MEDIAN COURSE COMPONENT NOW HAS ONLY 1.7% YEAR OVER YEAR INFLATION. I MEAN, INFLATION IS NORMALLY JUST NOT EVIDENT IN THE TOTAL PICTURE. >> THE PCE IN A COUPLE WEEKS IS GOING TO BE MORE FAVORABLE WE THINK THAN THESE LATEST INFLATION READS AND I KNOW WHAT EVERYBODY SAYS ABOUT IT'S, YOU KNOW, IT BEING THE FED'S FAVORED MEASURE WHERE INFLATION IS. ARE YOU ENTERTAINING THE IDEA THIS IS NOT GOING TO BE AS EASY AS YOU THOUGHT IT WAS GOING TO BE FOR THE LAST MILE AND THEREFORE THE MARKET CAN'T DO WHAT YOU THOUGHT IT COULD? >> NOW THE FED HAS THREE INFLATION REPORTS IT CAN'T ARGUE AGAINST THAT ARE HOTTER THAN EXPECTED. >> AND THE BULLS CAN'T EXPLAIN THEM AWAY EITHER, CAN THEY? >> THAT'S RIGHT. WE WOULD NEED TO SEE IS APRIL AND MAY CPI IMPROVEMENTS IN THE FUTURE, AND THEN KEEPS THE FED FROM STANDING IN THE WAY OF THE ECONOMY. WHAT WE DON'T WANT IS A FED THAT WANTS TO FURTHER SLOW THE ECONOMY, WHICH IS RATE HIKES. I THINK IF THEY DO EVEN ONE HIKE THIS YEAR, IT'S STILL ACTUALLY A GOOD ENVIRONMENT FOR STOCKS. >> ONE CUT, YOU MEAN. >> ONE CUT. >> LET'S BE CLEAR, A FREUDIAN SLIP. THE GREATEST FEAR OF ALL IS THEY HAVE TO HIKE AGAIN, HOWEVER REMOTE THAT POSSIBILITY SEEMS TODAY, AND EVEN IF YOU PUT INTO THE SOUP ALL THE FED COMMENTARY WE'VE GOT OF LATE SEEMS TO BE PUSH OFF RATHER THAN PUSH UP. >> THAT'S RIGHT. AND I THINK IT'S, YOU KNOW, AT THE END OF THE DAY, EVEN THE CPI DOES LOOK LIKE IT'S SOMEWHAT STICKY, PCE IS MORE COOPERATIVE THAN PPI IS AND MEASURES LIKE TRUE FLATION SHOW INFLATION MUCH SOFTER, UMICH EXPECTATIONS MUCH LOWER, SO I THINK WE COULD ASK -- >> WHAT ABOUT THE VALUATIONS IN THE MARKET? HOW DO YOU COUNTER THE ARGUMENT THAT THEY'RE WAY TOO STRETCHED? MULTIPLES ARE WAY TOO RICH GIVEN WHAT NOW IS LIKELY TO BE THE CASE OF CUTS LATER ON? >> I MEAN I THINK WHEN SOMEONE LOOKS AT 20 YEARS OF HISTORY, THAT'S THE ARGUMENT THEY'LL MAKE. IF THEY LOOK AT 90 YEARS OF P/E MULTIPLES VERSUS INTEREST RATES, WHEN THE 10-YEAR IS BETWEEN 4 AND 5%, A PRETTY BIG RANGE, THE MEDIAN P/E IS 20 TIMES. SO WE'RE NOT EVEN AT A MEDIAN P/E MULTIPLE OF WHAT'S EXISTED WHENEVER THE 10-YEAR HAS BEEN IN THIS RANGE. SO -- AND THEN IF YOU LOOK AT THE MEDIAN STOCK IT'S AT 16 TIMES. I WOULD SAY THAT THERE'S UPSIDE TO EARNINGS. I THINK MULTIPLES CAN EXPAND. I DON'T THINK 5200 IS THE CEILING FOR STOCKS THIS YEAR. >> WHAT FEELS LIKE THE RIGHT CEILING NOW? >> I KNOW THIS IS GOING TO BE TOUGH FOR INVESTORS TO EMBRACE IT, BUT I THINK SOMETHING LIKE 56, 5700 IS PROBABLY WHERE THE S&P EXITS THE YEAR, MAYBE HIGHER. >> MUCH MORE BACK LOADED INTO THAT THAN YOU ONCE THOUGHT? >> I THINK IT'S STILL BACK LOADED BECAUSE WE'LL HAVE THE CUTS BEHIND US AND WE'LL HAVE VISIBILITY INTO 2025 EARNINGS WHICH PROBABLY COULD BE 270, MAYBE 280 NEXT YEAR. >> WHEN YOU SAY WE'LL HAVE THE CUTS BEHIND US ARE YOU SURE? NO JUNE. YOU THINK THE FIRST ONE IS IN JULY? >> OR IT COULD BE SEPTEMBER. BUT IT -- >> THAT'S WHY I ASKED YOU IF THE MOVE IN THE MARKET YOU SUGGESTED IS BACK LOADED. >> YES. >> YOU'RE NOT GOING TO GET A BIG MOVE UNTIL YOU SEE THE FIRST CUT AT THIS POINT. NOW THERE'S A LOT OF DISBELIEF IN THE MARKET. >> THAT'S RIGHT. AND SCOTT, ONE THING TO KEEP IN MIND THE PROBABILITY OF A JUNE CUT HAS BEEN REDUCED BUT IT CAN COME BACK IF WE HAVE A GOOD APRIL AND MAY CPI BECAUS
