The White House is no longer just setting the backdrop for markets, it is increasingly deciding which corners of Wall Street thrive and which struggle. Fundstrat strategist Tom Lee is telling clients that in this environment, betting against those policy choices is a losing trade. His message is blunt: when Washington singles out winners and losers, investors should pay attention or risk getting run over.
Tom Lee’s new rule: don’t fight the White House
Tom Lee has built a following by urging investors not to fight powerful macro forces, and he now puts the current White House squarely in that category. His argument is that President Donald Trump and his team are not just nudging markets, they are actively steering capital toward favored sectors and away from others, in ways that show up quickly in stock prices and credit conditions. In Lee’s view, ignoring that top-down pressure is as dangerous as fading a central bank that is determined to move interest rates.
Lee’s latest note frames the administration as a kind of super-investor, with the ability to reward some industries while tightening the screws on others through regulation, investigations and targeted relief. He points to a series of policy moves that have already created clear market “winners” and “losers,” and he argues that the pattern is strong enough that investors should align portfolios with the White House rather than fight it.
Mortgage relief and the housing trade
At the top of Lee’s “winners” list is housing, where he sees a direct line from the Oval Office to the bond market. He highlights how Trump has been ramping up a push on affordability for Americans, with a particular focus on lowering mortgage costs ahead of the midterm elections. That political priority has translated into pressure on lenders and support for institutional buyers of mortgages, a combination that Lee believes is structurally bullish for parts of the housing complex.
In practical terms, Lee argues that lower mortgage rates and friendlier terms for borrowers can support homebuilders, mortgage REITs and select regional banks that are positioned to originate and securitize loans rather than simply sit on long-duration assets. He notes that one clear beneficiary is the market for mortgage-backed securities, where policy support and the administration’s focus on Americans struggling with housing costs are pulling in fresh demand. For investors, Lee’s takeaway is straightforward: when the White House is leaning this hard into cheaper mortgages, fading housing-related assets is a risky stance.
Credit contraction and the new “losers”
On the other side of the ledger, Lee is blunt about the sectors he thinks are being squeezed by Washington. He describes a backdrop of credit contracting, arguing that policy choices are tightening financial conditions for certain borrowers even as headline rates may not fully reflect the pressure. “So actually, I think this is credit contracting,” Lee said, pointing to how regulatory scrutiny and political messaging are combining to make some forms of lending less attractive for banks and nonbank lenders alike.
One of the clearest examples, in Lee’s view, is the fallout from a criminal inquiry into Fed Chairma, which he lists as a second major “loser” in the current policy regime. That investigation, he notes, has helped push a key financial stock down 18% so far in 2026, a move he sees as emblematic of how quickly political risk can translate into market damage. Lee also stresses that the same forces that are tightening credit in some areas are reshaping the opportunity set for investors, with certain financials and rate-sensitive names now firmly in the crosshairs of Jan and his team.
Industrials, energy and small caps in the policy slipstream
Lee is not just focused on housing and financials. He also highlights a cluster of cyclical sectors that he believes are riding in the slipstream of White House priorities. Industrials, energy and small caps stand out on his list of favored areas, in part because they sit at the intersection of domestic investment, employment and national security, all themes that Trump has repeatedly elevated. For Lee, that political alignment matters as much as traditional valuation metrics when he is thinking about where capital will flow next.
Energy policy is a particularly vivid example. Lee notes that the administration’s stance has helped keep oil (CL00) higher, a tailwind for producers and service companies that are geared to benchmark crude prices. At the same time, he sees industrials benefiting from a mix of infrastructure spending, reshoring rhetoric and regulatory choices that tilt procurement toward U.S. manufacturers. Small caps, which skew more domestic in their revenue exposure, are another natural beneficiary of this policy mix, and Lee argues that investors who want to be on the same side as the White House should be looking closely at these parts of the market.
How I would translate Lee’s call into a portfolio
Lee’s framework is unapologetically top down, and I think that is the right lens for this moment. When Jan and Don in Washington are effectively signaling which sectors they want to nurture and which they are willing to pressure, it makes sense to treat those signals as a core input rather than background noise. In practice, that means tilting toward the policy beneficiaries he identifies, such as mortgage-linked assets, industrials, energy producers and domestically focused small caps, while being more cautious on areas facing credit contraction or direct investigative heat.
For a diversified investor, that could translate into a modest overweight in homebuilder ETFs, select mortgage REITs and regional banks with strong underwriting, paired with exposure to industrial conglomerates, oil and gas majors and small-cap indices that lean into U.S. earnings. On the other side, it argues for underweight positions in financials that are directly exposed to the criminal inquiry into Fed Chairma or that rely heavily on the forms of consumer credit where the administration is pushing for lower interest rates for credit cards and other borrowing. Lee’s broader point is that in a market where policy is picking winners and losers, following the Fundstrat roadmap may be less about politics and more about respecting the most powerful force currently moving prices.
More from Morning Overview