Have the markets and the economy decoupled?
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The stock market is wavering this year as investors fret over everything from tariffs to AI, but Mark Zandi thinks things could soon get a lot worse.
The top economist at Moody's Analytics, Zandi's takes are often more focused on the broader economy than the stock market. However, he said that recent events compelled him to offer a warning on where the US may be headed if certain conditions persist.
"There are times when I feel markets are overdone and increasingly disconnected from the economy," Zandi added. "Markets risk moving in a big way, causality is reversed, and falling asset prices threaten an already vulnerable economy. This is one of those times."
Zandi sees a dangerous shift taking place that's putting many assets at risk of a meaningful sell-off that could be a threat to Main Street as well as Wall Street.
"Valuations are high" he wrote in an X thread. "There are good fundamental reasons for this, but markets appear increasingly tainted by speculation. That is, investors are simply investing on the faith that prices will rise quickly in the future because they have in the recent past."
