The 3 things that could cause a market wipeout
Several macro-level uncertainties, including geopolitics, the US election, and conflict in the Middle East, could threaten the market’s bull run (^DJI, ^IXIC, ^GSPC). Interactive Brokers chief strategist Steve Sosnick sits down with Market Domination Hosts Julie Hyman and Josh Lipton to outline three risks he sees as potential fuel for the market to wipe out. The first two risks center around the presidential election. Sosnick says, “The election itself can be a bit of a hairy situation. I think right now, although the market sort of has been pricing in some Trump trades, I think the polls are still telling you that it's a coin toss” between former President Donald Trump and Vice President Kamala Harris. Election day is now just twelve days away. The first risk, he says, “if Trump seems to be going through with the idea of his tax policies,” then “the bond market (^TYX, ^TNX, ^FVX) may flip out.” Secondly, “if Harris seems committed to not extending the Trump tax cuts, you may see a little of tax selling brought forward rather than rather than kept into next year.” The third market risk is “the lofty expectations we've priced in. We've priced in 15% growth for next year basically on earnings and that's that's a tough thing to reconcile with an economy that that people are clamoring for interest rate cut.” On rate cuts by the Federal Rserve, he believes a 25-basis-point cut has been anticipated for the November FOMC meeting: "But going forward, how much are they going to do? And so the markets better figure out it. [It’s] better to lean on the side of the strong economy that can deliver those earnings results, rather than sort of hinging upon rate cuts. And if we're hinged too much upon rate cuts, that could be a bit of a disappointment as well.” Catch Steve Sosnick also weigh in on Tesla's (TSLA) third quarter results and the push it is giving to the market, calling the EV giant's earnings "a hard story to poke holes in." To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Naomi Buchanan.
