The CIO at Verdence Capital Advisors is concerned that trouble may be on the horizon, despite the market being trading near record highs.
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Megan Horneman, who manages assets worth $4.1 billion, believes that the U.S. trade deadline on August 1 is being met with too much confidence.
She said, “This market is pricing in the perfect situation,” during Monday’s “Fast Money” segment on CNBC.
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She cites technical overbought situations and uncertainty about Federal Reserve policy as possible problems in addition to tariff worries.
Horneman, a former senior investment strategist at Deutsche Bank, stated, “I think you can see a bit of a valuation correction once we see that [rate cuts] might be priced off the table, coinciding with the fact that we’re not quite sure what’s going to happen with the tariff perspective.”
The fact that technical readings are indicating overbought circumstances in growth companies, including Big Tech, worries Horneman the most.
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“These are things that we think might upset the rally that we’re seeing here,” she stated.
Horneman sees herself as a long-term bull and sees setbacks as opportunities, despite her short-term caution. Her top picks for market weakness are foreign stocks.
“I’d warn that right now, they’re expensive from a valuation perspective [but] cheap compared to the U.S.,” she stated. “They’ve been neglected for far too long, and I believe that some of that rotation is just getting started. I believe that can go on.
Right now, her main piece of advise for investors is to make sure they are allocated appropriately in order to navigate the uncertainties.
Guy Adami, a “Fast Money” trader, has similar worries, pointing to the proportion of ordinary investors fueling recent market advances.On Monday’s show, he stated, “Just in terms of valuation, things have gotten a tad frothy here.”
Last week, the S&P 500 closed at all-time highs. The tech-heavy Nasdaq is up 21% over the last three months, while the index is down 16% as of Friday’s close. Additionally, the Nasdaq is at
This article was contributed to by Natalie Zhang of CNBC.
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