Global market rally shows signs of fatigue, Citi veterans warn

The global market rally that stunned all of us throughout 2025 is finally starting to crack, as veterans began to warn about being on “borrowed time,” according to CNBC On Air.

The MSCI All Country World Index, which tracks more than 2,500 stocks from around the world, jumped 20.6% in 2025. It even hit a new high on January 15, and it’s still up over 2% this year.

But that nonstop rally has gone on for nine months without any major crash.

Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, says we’re overdue. “Markets, having had a very good 2025, particularly Asian markets… and having gone over nine months without a meaningful pullback, the historical clock is ticking in terms of markets being overdue for some sort of a correction.”

Timothy pointed out that historically, markets see a 10% correction every eight to nine months. “And we’ve not had that. If there’s a catalyst in the form of geopolitical risk concerns, then I think investors need to be aware that there could be some sort of a pullback,” he said.

Trump’s walk-backs and global tensions are behind current uncertainty in markets

Despite a lot of political drama, traders just keep ignoring it. Even the standoff over Greenland didn’t shake the market. And when President Donald Trump recently eased off another tariff threat, stocks jumped again.

That sparked more talk of the “TACO” trade, short for “Trump Always Chickens Out.” It’s the belief that Trump makes threats, but always backs down. So traders assume the danger never lasts.

But Miroslav Aradski from BCA Research thinks this could backfire. “There is a deep paradox at the heart of the ‘TACO trade.’ In the absence of market discipline, Trump has more leeway to pursue potentially destabilizing policies. This means that when the next crisis comes, it could be bigger than the last one.” Aradski said just because stocks haven’t dropped doesn’t mean they’re safe. He said the S&P 500 has gone 185 days without a 10% decline, based on rolling peaks. That doesn’t prove anything on its own, but it shows how long this calm has lasted.

Kevin Gordon from Schwab Center for Financial Research also warned that people shouldn’t focus too much on how long it’s been since the last drop. “When valuations are stretched and sentiment is frothy, there is a stronger chance for pullbacks to be more severe. There needs to be a negative catalyst,” Kevin said.

Gordon said measures such as credit card rate caps or escalating geopolitical tensions could hit stocks if they begin to pose a meaningful or material risk to companies’ bottom lines, or drive bond yields sharply higher.

Jay Woods at Freedom Capital Markets said stocks are showing late-cycle signs. Big companies are still posting strong profits, but the gains aren’t really sticking. “The major indexes have stalled for now but overall market breadth remains healthy,” Jay said. He mentioned that money is now rotating into small caps, materials, and energy, but the biggest stocks are still driving the show.

Jay added that the Nasdaq 100 hasn’t hit a new high since October, and it might be the first to fall. That’s a problem, because if the tech giants slip, the market could take a bigger hit. Kevin also said that the hype around artificial intelligence is starting to lose steam.

Investors are getting nervous about whether all the money being poured in will keep paying off. “That won’t be the case forever,” Kevin said. The focus is slowly shifting to smaller stocks and older sectors that follow the economy more closely.

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