Barclays global equity tactical strategist Alex Altmann has shifted from a bullish stance to a short-term cautious view on US stocks, saying retail speculation now matches or even exceeds the frenzy seen in 2021. In his view, the mix of rising real yields and structural risks tied to single-stock leveraged ETFs could leave the S&P 500 facing a 6% to 7% correction.
Speaking on a podcast, Altmann said he is now “tactically cautious” in the near term. That change stands out because he had stayed constructive through earlier periods when others turned negative, including last September and the market reaction to the Middle East conflict in March. This time, he pointed to sharply higher funding costs and rising inflation-adjusted yields as a direct headwind for equity valuations.
Single-stock leveraged ETFs seen as a structural risk
Altmann said current retail enthusiasm has reached, and may have surpassed, 2021 levels. The difference is that the market is no longer operating in a deeply negative real-yield setting. Real yields are now positive, which changes the risk profile for equities. He also noted that bearish views are scarce on the institutional side, leaving positioning and sentiment heavily skewed in one direction.
His sharper warning focused on leveraged ETFs, especially products tied to a single stock. Because these funds must rebalance every day, they can push large trading flows into a narrow group of names. That can create a “tail wagging the dog” effect: rising stocks get pushed higher by mechanical buying, while declines can accelerate as the same structure amplifies selling pressure.
AI momentum trade looks crowded as correction unfolds
The report said both retail and institutional investors are chasing stocks that have already rallied hard, making momentum trades crowded, particularly in AI-linked names. In the options market, investors are leaning toward upside chasing instead of hedging. Altmann said that leaves the market vulnerable to even a small shift in sentiment or narrative, with the potential for a sharp adjustment once the move starts.
He estimates the total S&P 500 drawdown at roughly 6% to 7% and said the correction may already be halfway done based on current declines. For him to turn constructive again, either the market would need to fall enough to clear overheated sentiment, or real yields would need to retreat, or the Federal Reserve would need to talk yields lower.
High inflation and high yields keep pressure on risk assets
On the macro side, US stock futures weakened as technology shares led declines, while the 10-year Treasury yield kept rising. Gold and silver also fell sharply. Markets are now waiting for the US May CPI report, with inflation expected to climb above 4% year over year for the first time since 2023. In that rate and inflation backdrop, risk assets globally, including crypto, remain exposed to heavier short-term volatility.