## Is Trouble Brewing Despite Record Highs?

The market is soaring, but not everyone is celebrating. Verdence Capital Advisors CIO Megan Horneman, managing $4.1 billion in assets, is sounding a cautious alarm. Here’s a breakdown of her concerns:

• Trade Deadline Anxiety: Horneman believes the market is overly optimistic about the August 1st U.S. trade deadline.
• Tariff Uncertainty: Potential tariffs are a major worry, adding to market volatility.
• Fed Policy Concerns: Uncertainty surrounding Federal Reserve policy is another factor to watch.
• Overbought Conditions: Technical indicators suggest growth stocks, including Big Tech, are overbought, signaling a potential correction.
• Valuation Correction Possible: Horneman anticipates a valuation correction if rate cuts are less likely and tariff issues persist.
• Long-Term Bullish, Short-Term Cautious: While concerned about short-term risks, she remains a long-term bull, seeing pullbacks as buying opportunities.
• International Stocks as a Play: She favors international stocks, which she sees as undervalued compared to the U.S. market.
• Allocation Advice: Her key advice to investors: ensure your portfolio is appropriately allocated to weather potential volatility.
• Retail Investor Influence: “Fast Money” trader Guy Adami also notes concerns, citing the impact of retail investors on market gains.

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