As we have discussed, there are numerous reasons to be now cautious on the stock market: a potential recession in the second half of 2024 (that is our current view), Japan and Germany entered a recession, valuations for the S&P 500 are now over 20x earnings, concentration of investments in technology is similar to the technology bubble in 1999/2000, the market is very extended technically, bullish sentiment is very high, and speculation is very high. The S&P 500, relative to bonds, is about 15%-20% overvalued, while interest rate cuts by the Fed have been pushed out as inflation has been much stickier than expected (our view is inflation will truly not be fixed without a recession).

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