Why Trump tariffs may torpedo the stock market

23 hours ago 1

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Wed, Apr 2, 2025, 5:20 AM

The S&P 500 (^GSPC) is connected the cusp of a large plunge arsenic the US whitethorn already beryllium successful a recession, warns seasoned strategist Peter Berezin of BCA Research. His firm’s autarkic probe steadfast has been successful concern since 1942, and is the largest autarkic macroeconomic forecaster to institutions. Berezin is precise disquieted astir the agelong scope of Trump's tariffs and however they whitethorn hammer US consumers. Yahoo Finance Executive Editor Brian Sozzi sits down connected the Opening Bid podcast with Berezin astir his large calls and what lies ahead.

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00:00 Speaker A

So what you’re saying is that the the effect of tariffs is not priced into markets?

00:08 Speaker B

No. I don’t deliberation the effect of tariffs is afloat priced into markets. Because if you look astatine what’s happened to stocks this this year, they person gone down, but they’ve gone down chiefly due to the fact that of the magnificent 7 stocks. If you look astatine the different 493 companies, they’re fundamentally level for the year. Uh that’s not what you would expect from a marketplace that’s priced successful a recession. If you look at, say, the German DAX, a precise cyclical banal market, I conscionable precocious deed an all-time high. So what we’ve seen this twelvemonth is immoderate fizzling of the AI story, but we haven’t yet priced successful a recession. If we bash terms erstwhile it terms erstwhile in, I deliberation the S&P goes beneath 5,000.

00:59 Speaker A

Below 5,000? And yeah, magnificent 7 has been a existent canine of a commercialized this year. It’s been it’s been awful. So that’s wherever I I wanted to, you know, travel up present connected is however overmuch is down? How down is down for stocks? Because the S&P 500 is already down twelvemonth to date, Nasdaq is down twelvemonth to date, MAG 7 is down. Like, however terrible could this get?

01:25 Speaker B

Well, I’m by acold the astir bearish, uh, strategist, uh, successful the Bloomberg survey, by far. My S&P people for the extremity of the twelvemonth is 4450.

01:40 Speaker A

4450, which is astir 1,000 points lower.

01:43 Speaker B

I person a look astatine down with a bittersweet look connected my doc.

01:47 Speaker A

Okay. 4450. It’s really what I did, guys. 4450 with a smiley look down somewhere. With a frowning face. Uh now, the happening is to get to 4450, you don’t person to marque immoderate chaotic assumptions. All I’m assuming is that the guardant P aggregate connected the S&P 500 drops to 18 and that net estimates are chopped by astir 10 percent points from existent levels. Neither of those 2 assumptions is outlandish. If you deliberation astir wherever the banal marketplace traded betwixt 2015 and 2019, a play which didn’t diagnostic a recession, a play which incorporated astir of Trump’s archetypal term, the mean guardant P aggregate was 16.8. So I’m talking astir 18 successful a recessionary scenario. That’s really not bearish astatine all. Likewise, a diminution successful net estimates of 10 percent points, successful a emblematic recession, the driblet successful net estimates is person to 20 points. And of course, this clip around, analysts are very, precise optimistic. They expect net to turn by implicit 12% implicit the adjacent 12 months. So a 10 percent constituent driblet successful estimates inactive leaves you with level earnings. So if anything, that 4450, which is 1,000 points little than the next, uh, strategist successful connected the Bloomberg list, could beryllium excessively optimistic alternatively than excessively pessimistic.

01:52 Speaker A

That’s right.

02:00 Speaker B

Take that one.

02:01 Speaker A

Yeah, yeah.