## Is Trouble Brewing Beneath the Market’s Record Highs?

The market is soaring, but not everyone is celebrating. Megan Horneman, CIO of Verdence Capital Advisors, is sounding a cautious alarm, warning of potential headwinds despite the current rally. Here’s a breakdown of her concerns:

• Trade Deadline Concerns: Horneman believes the market is overly optimistic about the August 1st U.S. trade deadline, potentially ignoring the risks.
• Tariff Uncertainty: The ongoing uncertainty surrounding tariffs is a key concern, as any negative developments could trigger a market correction.
• Federal Reserve Policy: Changes in Federal Reserve policy, particularly regarding interest rate cuts, could also negatively impact valuations.
• Overbought Conditions: Technical indicators suggest that growth stocks, including Big Tech, are in overbought territory, making them vulnerable to a pullback.
• Valuation Correction Potential: Horneman anticipates a valuation correction if rate cuts are taken off the table, coinciding with tariff concerns.
• Long-Term Bullish Outlook: Despite short-term caution, Horneman remains a long-term bull, viewing pullbacks as buying opportunities.
• International Stock Opportunity: She recommends international stocks as a potential play during market weakness, noting their relative undervaluation compared to U.S. stocks.
• Allocation Advice: Horneman’s key advice to investors is to ensure their portfolios are appropriately allocated to weather potential market volatility.

For the full story, you can read the original article on CNBC.