5 Reasons The Market Is Ripe For A July Selloff

Summary

• Equity valuations are forging new all-time highs as markets continue to price in lofty expectations, particularly for growth stocks amidst secular AI demand.
• Yet the recently enacted $3.4T tax and spending bill is poised to raise fiscal deficits by as much as $3.3T over the next 10 years.
• The ensuing implication on Treasury yield is likely to upend dynamics underpinning key macrotrade strategies, with adjacent disruptions to equity valuations that the market has yet to de-risk.
• The hard-set July 9 tariff deadline is also fast approaching, with imminent disruptions to existing corporate cost structures not yet priced into today's all-time high valuations.
• With stretched valuations leaving little margin for error and the VIX also showing resilience at elevated levels, we remain incrementally cautious of a looming correction.

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July is shaping up to be a potential turning point for market valuations, given the burgeoning convergence of looming macroeconomic risks. The Republican tax and spending bill—or “one big beautiful bill”—just signed by President Trump, alongside the

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.