Equity momentum can't continue as macro factors are still unknown, says Sri Kumar

Market Outlook - Shrikumar Global Strategy predicts a 10% correction in the market by the end of the year due to various macro factors [1] - The potential for increased inflation, as indicated by Jerome Powell, could negatively impact NASDAQ and S&P [3] - Corporate earnings may not be as strong as before, contributing to a potential reality check in the earning season [4] Macroeconomic Factors - Geopolitical risks, including the Iran-Israel war, and uncertainties surrounding tariffs and the fiscal deficit, are key concerns [2][3] - The divergence between the optimism in equities and the 10-year yield suggests that macroeconomic influences are not being fully accounted for by the market [4] - High yield credit performing well indicates a higher risk appetite, comparable to equities [4][6] Monetary Policy & Banking - Changes to bank loan requirements could impact the amount of treasuries bought by banks, potentially lowering yields and debt service costs [7][8] - Reducing bank reserves could diminish the Federal Reserve's leverage in stimulating or cutting back the economy [8][9] - The need to finance the fiscal deficit at a reasonable cost may be a primary driver behind changes in bank loan requirements [10]