The worst has yet to come for the stock market as investors fail to grasp the risks related to Federal Reserve potentially cutting interest rates, according to"What equity markets refuse to acknowledge is that if rate cuts happen this year, it will either be because of the onset of a recession or a significant crisis in financial markets," Kolanovic said in a Monday note.
That disconnect could ultimately come at the expense of stock market investors, according to Kolanovic, who highlighted a host of other reasons why the stock market is set up for failure right now. "We are more positive on tech this year than last, but think the sector is getting stretched in absolute terms... Leadership is turning defensive and we think this rotation continues into/around the last [interest rate] hike," Kolanovic said.
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