Hey Folks,

The market keeps setting new highs. That raises a simple question. Is a crash coming soon?

Signs of Strain

Some bank leaders see pressure building. Jamie Dimon at JPMorgan warns that stock prices sit high and that policy shifts can hit demand. He sees a ten percent pullback as likely within a year.

Goldman Sachs expects the S&P 500 to gain another ten percent in 2025, but notes that new tariffs can fuel sharp swings. Morgan Stanley thinks global growth will slow to about three percent through 2025 and 2026. They also note that U.S. tariffs could weaken demand late next year.

Tech stocks power the rally. The Magnificent Seven account for a large share of the gains. At the same time, the S&P 500 trades at a price to earnings ratio of about 30. The ten year average sits near 19. High valuations can signal a pause ahead. Corrections tend to appear when earnings fall behind prices.

Economic Backdrop

The Federal Reserve cut rates to a range of 3.75 to 4 percent in October. That helps borrowers and lowers debt costs. Third quarter GDP grew at a 2.7 percent annual rate. Full year growth for 2025 is on track for about 2.5 percent. That is a step down from 2024.

Unemployment holds at 4.3 percent. Monthly job gains slow to about 132,000. Wages rise about four percent, which helps support spending. Tariffs add new pressure. Higher import costs could push inflation toward three percent by mid 2026. Election outcomes add more questions. A recession becomes more likely if hiring slows or trade conflicts grow.

The Competitive Landscape

Investors split into three camps.

The bull case calls for steady earnings, gains tied to AI, and a bounce in small cap stocks from lower rates.

The bear case warns that valuations stretch too far. Rising tensions overseas and slower growth could spark a sharp correction.

The neutral case sits in between. Bonds and gold attract interest as simple hedges.

This mix shows that markets price in both hope and caution.

Why the Market May Overlook the Risks

New highs make headlines. Warnings get lost. Job data looks fine, yet pockets of weakness sit under the surface. Corporate buybacks reach about 800 billion dollars this year. Buybacks support share prices, but the effect is short lived. Valuations rose this year as investors chased returns. Past crashes often began when warnings went quiet. The dot com era saw price to earnings ratios above 40. Today’s level of 30 sits below that peak but still runs hot.

Enterprise Stability

Large firms continue to lead. They cut costs, hold strong margins, and invest in AI. These moves support steady growth. A crash usually needs a clear trigger. None stands out right now.

The market faces real risks as prices rise. A pullback looks reasonable. A full crash seems less likely in the near term. Stay ready for either path.

Until next time,
Equity Insider

Disclaimer
—
Equity Insider is a publication of Market Vision LLC, a Texas LLC. All content is for general educational and informational purposes only and is not investment advice or a request to buy or sell any instrument. Market Vision LLC is paid to publish favorable information about featured instruments. This creates a material conflict of interest under SEC Rule 17(b). You should assume a conflict exists. The publisher and its affiliates may hold and trade positions in any featured instrument. All trading involves risk, including the loss of all capital. You are responsible for your own due diligence and decisions. By accessing this content, you agree to the full terms, including binding arbitration in Texas and a waiver of jury and class action rights.