(Bloomberg) — A slowdown in economic growth is becoming a bigger risk for US stocks as they scale record highs, according to Citigroup Inc.’s Stuart Kaiser.
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The bank’s head of US equity trading strategy said the risk-reward for stocks looks “as bad as it has in the last 12 months or so” as the economy shows broad-based weakness.
The combination of softer data and a strong rally in equity markets “does make me a little bit uncomfortable,” Kaiser said on Bloomberg TV. “Our base case is still positive, but we’re kind of looking over our shoulder a little bit.”
US stocks returned to all-time highs this week, fueled by the frenzy around artificial intelligence and optimism that the Federal Reserve would be able to cut interest rates later this year. Focus Friday is on a key jobs report that is likely to show a gradual cooling in the labor market.
Bank of America Corp. strategist Michael Hartnett also warned that a Fed rate cut could be a sign of trouble for the economy, and would benefit bonds over stocks.
–With assistance from Jonathan Ferro and Lisa Abramowicz.
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