The market is flooded with positive macroeconomic news, investor sentiment has improved and fears of a recession are receding somewhat. But this does not mean that all danger is over. Quite the contrary - and that is what several big names on Wall Street and in the financial world are afraid of.

US equities have just had their best start to the year since 2019, which is a little strange because for several months before that investors were extremely worried about rising interest rates and the threat of a recession.

The S&P 500 has gained nearly 7% so far in 2023 after last year's giant plunge, which was the worst since the 2008 credit crisis. Its gain last month was the best in January in four years.

The recent rally has been driven mainly by hopes that rapidly cooling inflation in the U.S. will allow the Federal Reserve to stop raising interest rates or even start cutting them this year. Several other macro reports also contributed. I wrote more about them here: Good news flooding the market. But Americans are still worried and it's affecting the whole economy

The survey I mentioned here shows that Americans still haven't lost their long-held skeptical view. And neither has Burry and several other big names in the financial world.

Last week, the eternally skeptical investor Michael Burry issued a serious warning to investors, summing up his view of the market in a single word on Twitter: SELL

Michael Burry scared millions of investors. Sell, he announced in a cryptic message

Leading economists David Rosenberg and Jeremy Siegel also warned that stock gains early in the year are likely to be short-lived.

Rosenberg warned on Monday that the S&P 500 index could plunge as much as 30% once fears of a Fed-backed recession set in. Siegel said the Dow Jones Industrial Average could also lose ground once investors realize the Fed could move to raise interest rates even more aggressively to curb inflation, which is still far from its 2% target.

"You could say the market has already made up its mind about the Fed and now expects a cut before the end of the year," she said. "But taking off the last few inflation points will be difficult - we are in a situation where we think central banks will have to keep rates higher for longer, and at some point the market may have to adjust to that."

"We are absolutely in line with the market - that there will be a recession in much of the developing world that will lead to lower interest rates sometime in 2023," Investec chief economist Philip Lee told Insider in a recent interview. "There will be some stimulus to the economy by the end of the year."

According to Karim Chedid of BlackRock iShares, this year's stock rally reflects investors' blind adherence to the old hackneyed playbook of the Fed easing to fight inflation to save falling stocks. BlackRock's new "playbook" looks very different now.

https://www.youtube.com/watch?v=Pq0jQl5mdf4&t=197s

"In the past, we could rely on the central bank to step in when macro fundamentals deteriorated - today we're in a very different environment," he said in a recent interview. "Central banks are focused on one thing, which is price stability."

Morgan Stanley chief equity strategist Mike Wilson, who predicted in late 2022 that U.S. stocks could fall 24% in the first half of this year , noted in a recent research report that the market is experiencing a "surprisingly good start." But all is not yet said to be won.

The rally is unlikely to last, he said, adding that "investors seem to have forgotten the basic rule - don't fight the Fed".

Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.