Another stock market crash coming, Wall Street's top investors warn

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'We haven't left the bubble': Wall Street's elite investors are privately warning that the stock market is headed for a second wave of pain

scenarios on the table. The stock market is still deep in the woods — and there are bears in this forest.It's easy to forget about a bear market when things are looking good. Even with some recent weakness, the S&P 500 is up nearly 5% year to date, and the Nasdaq is up just under 11% for the year. The US economy is continuing to surprise withand bumper job growth. It's like all the good little boys and girls on Wall Street asked for a rally for Christmas and got it.

As it stands, we remain far away from any sort of landing: The consumer price index — the most widely watched measure of inflation — has come down from its, but it was still at 6.4% in January, well above the Fed's goal and barely a nudge down from December's 6.5%. The Fed must consider the possibility that the 6% range is a sticky spot for inflation — and to get prices down, it could be forced to hike rates higher than what analysts have been expecting.

The economic conditions that prompted the market's initial paradigm shift — rising interest rates and inflation — are not going away soon. Anytime Wall Street has forgotten that over the past year, it has gotten punished. In fact, with the economy as strong as it is, inflation may even try to stage a comeback. The dramatic variability of outcomes injects volatility into the market that even the most seasoned investors find hard to navigate.

 

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