Powell's warning has come true? Trump's tariffs + high valuations are sinking the stock market.

Fed Chairman Powell mentioned in September that stock valuations were too high, at that time the S&P 500's PE was 22.5 times. Although it has now returned to 21.5 times, it is still far above the 10-year average of 18.7 times.

The question arises - Tariff policies put pressure on the economy:

• Inflation jumped from 2.3% in April to 3% in September.
• Employment growth dropped from an average of 123,000 per month at the beginning of the year to 39,000 per month after May.
• The unemployment rate rose from 4.2% to 4.4% (a four-year high)

What's even more heartbreaking is that the consumer confidence index fell to 51 in November, the second lowest level since 1978. People are worried about prices and income, which directly threatens consumer spending—consumption accounts for two-thirds of GDP.

Wall Street is collectively bullish, predicting a 20% rise in the S&P 500 next year. But the question is: with high valuations + a weak economy + consumer confidence at a new low, is this prediction reliable? Now it might actually be time to consider increasing cash reserves.