Emboldened by the U.S. Federal Reserve’s December pivot, investors entered 2024 expecting both a series of interest rate cuts and a re-acceleration in corporate earnings. But there is an inherent contradiction in these assumptions. An economy where the Fed is slashing rates aggressively likely won’t be conducive to stronger earnings. Similarly, a strong economy will likely cause the Fed to ease policy much slower than the market expects. Regardless, visible signs of pent-up exuberance are beginning to emerge and this risk should be on every investor’s radar.