Time to Sell? Downside Risks Rising for U.S. Stocks, Says Dempsey
Fund manager Ed Dempsey of the ATAC Inflation Rotation Fund is troubled by the benchmark's resilience, while disasters unfold all around it.
"Gold (GLD) crashed. Japanese government bonds crashed. Emerging Markets (EEM) crashed. U.S. bonds (^TNX) crashed," Dempsey says, adding that other rate-sensitive sectors like homebuilders (XHB) and utilities (XLU) "are also reacting to spiking interest rates." As these sectors take it on the chin, the broader S&P 500 stands strong, a veritable last man standing if you will.
Despite the S&P 500's resilience, Dempsey notes larger issues do remain. The world's top two central banks are being less accommodative, with the Fed hinting that bond purchases may taper, as well as what Dempsey describes as outright "tightening" by the People's Bank of China.
"The last piece that is left here is the S&P 500," and having "not made a new high in well over a month," Dempsey believes the downside risk for the S&P 500 is very high.
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