## Market Highs Mask Potential Trouble Ahead

The market is soaring, hitting record highs, but not everyone is celebrating. Megan Horneman, CIO of Verdence Capital Advisors, is sounding a cautious alarm, suggesting that beneath the surface of the rally, potential risks are brewing. Here’s a breakdown of her concerns:

• Trade Deadline Concerns: Horneman believes the market is overly optimistic about the upcoming August 1st U.S. trade deadline.
• Tariff Uncertainty: The potential impact of tariffs remains a significant concern.
• Federal Reserve Policy: Uncertainty surrounding future Federal Reserve policy decisions adds to the market’s vulnerability.
• Overbought Conditions: Technical indicators suggest that growth stocks, particularly in the tech sector, are overbought.
• Valuation Correction Potential: Horneman anticipates a potential valuation correction if rate cuts are taken off the table and tariff concerns intensify.
• Long-Term Bullish Outlook: Despite short-term caution, Horneman remains a long-term bull and sees pullbacks as buying opportunities.
• International Stocks: She favors international stocks, which she views as relatively cheap compared to U.S. stocks, and expects a continued rotation into them.
• Allocation Advice: Her key advice to investors is to ensure their portfolios are appropriately allocated to navigate the current uncertainty.
• Retail Investor Concerns: “Fast Money” trader Guy Adami also expressed concerns about the market’s valuation and the role of retail investors in driving recent gains.

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