Goldman’s Pasquariello: ‘It is now a good time to tap the brakes on equities’

Nasdaq Total Returns (NASDAQ:QQQM) During the first half of this year, it rose by 18%, while the S&P 500 (SP500) index gained by 35% since its lows in October.

Additionally, since late April, stocks of major U.S. tech companies have risen 24%.

But Goldman Sachs’ Tony Pasquareello said in a note on markets and macroeconomics: “My instinct is that now is a good time to hit the brakes.”

He mentioned several risks that threaten the bullish narrative of stocks:

First, the fiscal deficit is now expected to be $1.9 trillion, an increase of $400 billion from four months ago, and with the US presidential election shaping up, he said he was concerned about the weakness of long-term Treasuries (TLT), (TLH).

Second, “continued accumulation of exposure” within the trading community.

Third, since April, gains have come from a small group of stocks, and “the history book tells us of the risks of further selling as the upside narrows.”

In conclusion, he said we are in a bull market, “but the potential for drawdown is rising, so I am looking for places to reduce overall portfolio risk as we move into the next phase of the political game.”