Om, Yes, the market recovery could be getting ahead of itself for sure, and Jamie Dimon and others are pointing out the risks. At minimum we need a pullback to the 200 MA, just to get things on firmer ground. So that's my working assumption, the only question being whether the pullback comes before the S+P 500 reaches the Feb highs (~ 6145), or after. I dropped the Flex side down to 1% (from 7%) in anticipation of a pullback.
But as you said, the market drop could be a lot worse than that since there are so many landmines out there. Beyond the tariff related uncertainties, the timing of deals, whether we get a full recession or just a slowdown, etc, there are also some black swan type concerns in the months ahead. In particular is the 'US bombs Iran scenario'.
Trump would prefer a deal, but more likely the bunker buster bombs will be falling at some point, to knock out Iran's underground nuclear program. A lot of powerful interests don't want to see the Ukraine war end, and similarly with Iran, these interests want the underground nuclear sites destroyed. There's a logic to that too, and it may be better to just get it over with since the world clearly doesn't need another North Korea. But for investors it's another landmine to consider, possibly this summer or fall.
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AI
