Last Thursday, I visited with some of our accounts in Connecticut. They seemed remarkably relaxed that day as the S&P 500 fell into correction territory. Many of them are seasoned institutional investors and have been through lots of corrections and bear markets. Everyone attributed the selloff to Trump Tariff Turmoil 2.0.
The bulls still believe (hope) that President Donald Trump is using tariffs as a bargaining tool to negotiate lower tariffs with America’s major trading partners. Some of them predict that if that’s not the case, then Trump will back off in response to political pressure to do so from lots of constituencies that stand to be harmed by a trade war. He might also back off if the stock market continues to tank. The bears warn that by the time Trump ever would relent, the economy would be in a consumer-led recession and the stock market surely would be in a bear market.
We remain bullish, but less so. On Wednesday, March 5, Eric, Debbie, and I raised the odds of a bearish scenario from 20% to 35%. That might entail an outright recession or a period of stagflation. On March 9, we wrote: We can’t rule out the possibility that a bear market started on February 20, the day after the S&P 500 rose to a record high. On March 13, we lowered our year-end 2025 S&P 500 target from 7000 to 6400.
