FOMC could trigger a very big rally in equities, says Fundstrat's Tom Lee

• Fed rate hike is likely due to market pressure, but unnecessary as PCE is expected to drop 100 basis points without intervention.
• Higher 10-year Treasury yields (around 5%) are manageable for the US economy and historically correlate positively with P/E expansion up to 6%.
• Despite current pessimism, the market is poised for a 'very big rally' into year-end, with S&P 500 potentially exceeding 8200, driven by tech and the AI trade.
• Midterm elections are expected to result in gridlock, which historically benefits stock markets.

Tom Lee of Fundstrat Global Advisors believes the Fed will likely hike rates due to market pressure, but he argues it's unnecessary as inflation is set to drop naturally. He maintains a bullish outlook for the market, predicting a significant rally into year-end, with the S&P 500 potentially reaching above 8200, driven by tech and the AI trade.