Crypto rallied 30% in August, and Tom Lee says the S&P 500 has historically followed it by roughly a month.
Every desk quoted on air that afternoon was moving the other way, into the month with the worst seasonal record in the stock market's calendar. Lee sat on the New York Stock Exchange floor and said the caution itself is the reason to buy.
"I think this is a setup for actually September to be a strong month for stocks."
Lee is Fundstrat's head of research and a CNBC contributor, and he took the question with an August index target of his own sitting unmet behind him, which the host raised in the second question.
I listened to the full segment so you can skip it.
Here are the 8 takeaways that matter.
👤 Guest: Tom Lee, head of research at Fundstrat and a CNBC contributor, who publishes the firm's market strategy work
🎙️ Host: Scott Wapner, who anchors Closing Bell and CNBC's Fast Money Halftime Report from the New York Stock Exchange
📰 Published: 1 September 2026 on YouTube (CNBC Television)
🔴 YouTube | 🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 6 min
Key Takeaways
The caution everyone carried into September is the reason Lee expects a strong month He said the bottom for stocks might have been the day of the segment
The odds of a September rate rise might drop to zero once three data points land The jobs report, August CPI, then the Fed's decision, in that order
Crypto has historically led the S&P 500 by about a month, and it rallied 30% in August
A third of this year's inflation is flash memory prices, which no household ever pays Gasoline is the inflation people feel, and it is the one the Fed cannot control
Consensus turning cautious is what lets stocks rise on bad news JPMorgan's trading desk went neutral and Wells Fargo turned cautious on equities
The data center backlash has become political, with Republican governors backing moratoriums
1. A strong September call
Lee came on the first trading day of September with stocks down, oil higher and yields higher, into a question the host framed as the hour's central one: will September play true to history, or is there enough momentum to keep stocks climbing.
Lee said the caution investors are carrying into the month is itself the setup for a rally. "Well, I know people are edging into September cautious because markets are down. Oil's up. Yields are up." He said people are talking about the seasonality, and then put himself on the other side of it: "I'm going to be contrarian." The call itself: "I think this is a setup for actually September to be a strong month for stocks."
He was in the studio at Post Nine, on the floor of the New York Stock Exchange, rather than on a remote camera
2. Hike odds may hit zero
Asked why, Lee answered with a calendar of three events rather than a view on valuation.
He expects the fear of inflation to fade during the month. "Well, I think one is that the inflation fears are likely to quell this month."
The three events, in the order he gave them: the jobs report on Friday, August CPI the following week, and the Federal Reserve's rate decision in September
He said that sequence should show inflation weakening, and that the chance of a rate rise this month could disappear entirely. "I think the sequence of those events is going to show inflation is weakening. And I think the odds of September hike might actually drop to zero."
3. Markets top on bullishness
The host put it to him that the index target he had set for August was not reached, and asked whether he is too optimistic about a market facing inflation, higher rates, higher oil, hostilities in the Middle East and unresolved questions about the AI trade and data centers.
Lee did not argue with the list: "And, of course, it makes sense to be worried about these things."
His answer was that markets top when investors are bullish, and investors are not bullish now. "You know, these highs were made in August when people are cautious and people are cautious here." "So, to me, I think there's a wall of worry here that actually should be viable."
On the geopolitical risk in particular, he said the historical record points the other way. "I mean, war concerns, as you know, have historically been buying opportunities."
4. A tactical reset, not a top
The host read out a note from Scott Rubner of Citadel Securities, saying he had gone through it earlier the same day on CNBC's Fast Money Halftime Report and was doing it again. The argument is the show's research, not Lee's.
The note's case is that the supports which carried stocks through August are being withdrawn one by one. Company earnings are done — "but they're gone now. They're behind us" — and the near-term balance of risk and reward has changed with them
Retail buying shrinks from here: "Retail remains a buyer, but historically they become smaller in September."
Trend-following funds have already rebuilt their positions, and companies stop buying their own shares as the pre-earnings blackout returns: "Systematic exposure has rebuilt. The corporate bid is going to fade. Blackout windows come back. So you can't do the buybacks."
The collapse in volatility that helped the market through August is also finished, the host read
What Rubner recommends is selling into strength and buying cheap hedges. "He says he would use strength to reduce exposure and add inexpensive protection."
It is a positioning call rather than a forecast of a bear market: "Goes on to say not looking for a broader bearish turn but a tactical reset."
5. Crypto leads by a month
Lee accepted the note and then said its description already happened somewhere else, one month earlier.
He said the conditions Rubner describes are the ones crypto traded on in August, immediately before it went up. "Those are all valid points." What is interesting, he said, is that the same description fitted the crypto market last month "You know, vol was down, retail was smaller. And we had a violent 30% rally."
The mechanism he offered is a lead-lag relationship between the two markets. "Crypto, believe it or not, has historically led the S&P by roughly a month."
He took that to its conclusion for stocks: "So I think this setup is very similar for equities. I mean, in fact, the bottom might even be today for equities."
The host pushed back that the crypto rebound had causes of its own — the Treasury Secretary's intervention in the bond market, the attention that drew to the size of the federal deficit, and the argument that the currency is being debased — and asked "So why do you think that what may have been a singular moment actually has legs?"
6. Flash memory, not gasoline
Lee answered the question about crypto by moving to inflation, which he called the loudest thing people talk about when they look at the stock market.
He said the stickiness in core PCE comes from one component, and it is the price of flash memory. Fundstrat wrote it up the night before, he said, citing studies that core PCE may have a floor under it because of the effect of flash memory. "It's accounting for a third of all the inflation."
His reason for thinking the market has this wrong is that no household actually pays that inflation. "But most people in their lives don't have flash memory inflation." The host's response: "But they have like gasoline tank inflation."
Lee agreed, and named the problem that creates for policy: "So, and gasoline, you know, is unfortunately something the Fed can't control."
Take the memory effect out and the rest of the basket is unremarkable, he said: "But the other components of inflation seem to be in line. Core PCE, if you adjust it, is actually almost mirrored on top of CPI, which is 2.4." A consumer price print in that same range next week is all he thinks the market needs: "I think the market loses its anxiousness about inflation."
7. Caution is already priced
The host listed the desks that had turned in the previous days — JPMorgan's trading desk moving to a tactically cautious, neutral view, Wells Fargo turning cautious on equities — and challenged him with "All these people are wrong."
Lee conceded the point and said it makes no difference. "Well, as you know, they're probably not wrong. But when everyone turns cautious, that means consensus has priced in a cautious scenario."
Once caution is in the price, bad news stops pushing the market down. Unless the economy is about to turn down, he said, that positioning is what allows stocks to rise on bad news "That's actually when the last sellers sold. That's when markets rebound."
8. Voters against data centers
The host said the data center question has come up every time Lee has been on recently and has now reached a boil, and asked what it does to the wider market as September begins.
Lee said the issue is real because it has become political. "It's a real issue because, as we talked about, it's resonating with voters, and we're seeing Republican governors sort of siding with that and supporting moratoriums."
He treats it as a communications failure by the industry rather than a change in the economics. "I just think the AI industry needs to do a better job of explaining the benefits. And I think they've gotten the message."
The benefits he named were job creation, the value to the people using the systems, and the strategic importance of the technology to the United States
Bonus Insights
The interview was the hour's "talk of the tape", the set-piece discussion the show is built around, and Lee did it in person rather than by remote camera
The host said he was repeating the Citadel Securities note from his own earlier show that day because of how much of it he had already highlighted there
The inflation argument was not made up on air: Lee said Fundstrat published it the night before the segment
Lee's bottom line is that the caution now visible in the desk notes, in retail flows and in the seasonality talk is already in the price, and that a market which has stopped believing in itself is what a bottom looks like rather than a top.
Products, Companies & Tools Mentioned
Fundstrat (Lee's firm, whose note the night before argued that core PCE has a floor under it because of flash memory prices)
Citadel Securities (Scott Rubner's note there, read out by the host, argues for using strength to cut exposure and buy cheap protection into September)
JPMorgan and Wells Fargo (The two desks the host named as having just turned cautious — tactically cautious and neutral at the first, cautious on equities at the second)
The Federal Reserve (Its September rate decision is the third of the three events Lee says will settle the inflation question, and he notes it has no control over the gasoline prices households actually feel)
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