Tom Lee's Fundstrat Granny Shots $GRNY Update 14 April 2025

Key Takeaways:

Tariff Turmoil Triggered Market Instability

Tom Lee highlights that the market destabilized due to abrupt, poorly communicated tariff measures called "Tariff Liberation Day." The tariffs are based on a crude formula aiming to close the trade deficit, with an initial 20% reciprocal rate, later "reduced" but still largely punitive to China.

Loss of Capitalist Certainty

Businesses require stable regulatory environments to justify long-term investments. Sudden tariff announcements without warning undermine confidence, potentially leaving firms with “stranded capital.”

Recession Risk Increasing

Following the tariff shock, market-implied recession probabilities surged to 68%, dropped after a temporary 90-day pause, but are now back at 58%, approaching DEFCON-level alert zones.

Federal Reserve is in a Holding Pattern

The Fed remains sidelined due to inflation uncertainty from tariffs. Until clarity emerges on economic impact, it won’t intervene with rate adjustments or stimulus.

Selloff Has Potentially Reached 'Sold Out' Conditions

Lee argues markets may be entering a “sold out” zone—when there's simply no more stock left to sell—even though sentiment is poor. High beta stocks and the MAG 7 (mega-cap tech) appear to be stabilizing.

Opportunities Amidst Chaos

Historically, buying during high volatility (e.g., when <25% of stocks trade above their 200-day MA) has yielded strong 6- and 12-month returns. Tom emphasizes long-term investing opportunities even in current turbulence.

Granny Shots ETF: Limited China Exposure

Of 33 holdings, only GE and Tesla have over 25% supplier exposure to China. Most stocks have strong U.S.-based supply chains—MicroStrategy and Palantir are 100% U.S.-sourced.

Recent Performance Review

GRNY ETF declined ~7.5% from late Feb to April 9, outperforming the S&P 500 by ~0.7%. However, year-to-date it's underperformed the index by about 2.6%.

Thematic Strength & Weakness

Best short-term theme: Style Tilt.

Worst: PMI Recovery, due to weak manufacturing data and distorted pre-ordering ahead of tariffs.

Among long-term themes, Energy and Cybersecurity outperformed; Easing Financial Conditions lagged.

U.S. Supplier/Customer Exposure Drives Resilience

Companies with high U.S. supply/customer exposure have shown positive earnings revisions and stronger price returns post-election. By contrast, firms heavily tied to Chinese supply chains or customers (e.g., Apple, Qualcomm) faced pressure

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