US stock market crash risks under Trump

What happened: The U.S. stock market's performance under President Trump has been driven by factors such as his tax policy, with the Dow Jones, S&P 500, and Nasdaq posting outsize returns. However, several bearish signals are emerging: the CAPE ratio is at its highest level since the dot-com crash, cash is flowing into low-risk funds, and consumer sentiment has plummeted. Influential figures like Ray Dalio warn that Trump's economic agenda could lead to a crisis worse than a recession.

Market impact: The broad market is affected, with the S&P 500 trading at its most expensive valuation since the dot-com crash. Sector-wise, the bull market rally has been fueled by Trump's tax policy, but potential headwinds include inflationary effects from geopolitical tensions, such as the Iran war. The Federal Reserve's response to these pressures could also impact the market.

What to watch next: The Federal Open Market Committee's (FOMC) next meeting on June 16, where interest rate decisions will be made, will be crucial. Additionally, the next release of the Michigan Consumer Sentiment Index on June 18 will provide insight into consumer confidence's evolution. Lastly, the Q1 earnings season, wrapping up in late July, will offer a clearer picture of companies' performance under the current economic conditions.