Trump’s Reign Of Tariffs: Stagflation Odds Up, S&P 500 Target Down
The expected fallout from Trump 2.0’s Reign of Tariffs undercuts our former bullishness and dims the prospects of our base-case Roaring 2020s scenario for now. It has also drained confidence in the US economy on the parts of everyone from CEOs to consumers to investors. Recent data showing manufacturing faltering and purchasing managers paying higher prices suggest stagflation is already taking root. We’re dropping the odds we assign to our Roaring 2020s scenario from 65% to 55% and upping the odds of a stagflation scenario, which may include a recession, from 35% to 45%. That 45% is also the probability we see that the stock market’s correction will deepen into a bear market in coming months. Yet we still expect an up year, with the S&P 500 rising above 6000 by year-end.
