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Morgan Stanley's Mike Wilson forecasts increased tariffs on Chinese imports and specific products from the EU and Asia, viewing current measures as a precursor to further negotiations. He predicts the S&P 500 could peak at 5,900 under stable conditions, with potential for 6,100 if earnings improve, but could drop to 5,500 with disappointing news. White House trade adviser Peter Navarro estimates tariffs could yield $600 billion annually, though economists like Mark Zandi argue the realistic figure is closer to $100-$200 billion.
Goldman Sachs has raised the likelihood of a recession under President Trump to 35%, citing the risks from new tariffs and a decline in household and business confidence. The firm predicts a 0.3% increase in unemployment, estimating that Trump's policies could reduce GDP growth by 1.2% over the next year. Meanwhile, Moody's Analytics has also increased its recession probability to 40%, warning of a potential "recession by design."
Goldman Sachs has raised the probability of a U.S. recession to 35%, citing deteriorating consumer and business confidence, and the economic impact of higher tariffs. The bank anticipates three interest rate cuts this year, despite inflation concerns, as it shifts focus to labor market issues and growth stagnation. Meanwhile, Moody's Mark Zandi has increased recession odds to 40%, suggesting a potential "recession by design" due to current policies.
As Wall Street faces increasing recession risks, JPMorgan's chief economist raised the likelihood to 40%, while Moody's chief economist increased it to 35%. The S&P 500, Nasdaq, and Dow Jones have been impacted by Trump's tariffs, which threaten $9.5 trillion in business, as retaliatory measures from affected nations loom. The Trump administration's trade policies continue to spark concerns about the stock market's stability and potential recession.
Cryptocurrency prices plummeted on Tuesday, with Bitcoin dropping 4% to an intraday low of $97,700, while Ethereum, XRP, and Solana fell over 5%. This decline was driven by rising U.S. bond yields and a risk-off sentiment in financial markets, particularly affecting tech stocks like NVIDIA and Tesla.The Labor Department's report of surging job vacancies added pressure, raising concerns about a hawkish Federal Reserve stance. Analysts warn that increasing bond yields could lead to a significant sell-off in cryptocurrencies as investors shift to safer assets.
Experts are warning of a potential bear market in 2025, predicting a decline of 20% or more due to the stock market's current 'frothy' conditions, which could severely impact millions of 401(K)s and the broader economy. Analysts highlight that high valuations, particularly among major tech stocks, are unsustainable and could lead to significant corrections. Concerns about asset bubbles and the influence of retail investors further exacerbate the situation, with some predicting a market drop this year, though long-term investors may view it as a temporary setback.
Despite a strong bull market and impressive returns, concerns are rising over the reliance on the "Magnificent Seven" tech stocks, with warnings of potential market bubbles. Economists highlight high valuations and the risk of a significant downturn, which could impact consumer confidence and spending. While the economic backdrop appears stable, the possibility of a correction looms, prompting investors to reassess their risk exposure.
In 2025, tensions may arise between President Trump and Federal Reserve Chair Jerome Powell over interest rates, particularly if inflation rises due to Trump's expansionary fiscal policies. While Trump may push for lower rates, the Fed's traditional approach could lead to conflicts, especially as Powell's term ends in 2026. Economic impacts from Trump's policies may take time to manifest, potentially delaying any Fed response.
Deflation has emerged in various sectors, with prices for physical goods like appliances, clothing, and new cars declining since October 2023. The consumer price index indicates a 1% drop in core goods, driven by normalized supply chains and a strong U.S. dollar. Energy prices, including gasoline, have also significantly decreased, contributing to lower costs in other areas, while food prices are influenced by unique supply-demand dynamics.
Trump's proposed universal tariffs could lead to significant price increases on a range of consumer goods, with clothing prices expected to rise by 12.5% to 20.6% and toys by 36.3% to 55.8%. This would result in a $46 billion decrease in purchasing power, disproportionately affecting low-income households. Critics argue that these tariffs would act as a tax on American families without creating new jobs in the affected industries.
Mark Zandi
People
The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
Morgan Stanley forecasts increased tariffs on China and select products from Europe
05:41 02.04.2025
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18:04 14.11.2024
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02:17 05.11.2024
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