Part 2/8:
Deuser outlines a "plausible chain of events" that could signal a market downturn. He highlights the scenario of a hotter than expected Consumer Price Index (CPI), which may prompt the Federal Reserve (FED) to pause and express uncertainty regarding future rate-cutting cycles. This uncertainty, particularly stretching into 2025, could lead to a significant rotation away from recent winning stocks, primarily those in the growth sector, resulting in a decline in overall market performance.
Although Deuser does not foresee this scenario as his base case, he believes that it is essential for investors to acknowledge such a possibility. He emphasizes that if a market downturn does occur, it will likely stem from this chain of events unfolding rather than being a stand-alone prediction.