Steve Cohen, the chairman and CEO of hedge fund Point72, has adopted a bearish outlook on the U.S. economy, citing concerns about President Donald Trump's aggressive trade policies. Speaking at the FII Priority Summit in Miami Beach, Florida, Cohen expressed worries about inflationary pressures and a potential decline in consumer spending. He foresees a slowdown in economic growth from 2.5% to 1.5% in the latter half of the year, attributing this to uncertain macroeconomic conditions.
Cohen believes that the U.S. stock market is poised for a pullback due to these uncertainties. He anticipates a possible significant correction, noting that while it might only last a year or so, the best gains have likely already been achieved. This outlook marks a notable shift for Cohen, who has not taken such a bearish stance on the economy in some time.
"I think we're seeing the regime shift a little bit. It may only last a year or so, but it's definitely a period where I think the best gains have been had and wouldn't surprise me to see a significant correction," said Steve Cohen.
In addition to trade policies, Cohen criticized Elon Musk's ambitious goal to cut federal spending by $2 trillion, labeling it as a "tax" on the economy. He expressed similar concerns about the Department of Government Efficiency's efforts to reduce federal spending, arguing that these measures could further burden the economy. According to Cohen, punitive tariffs and immigration crackdowns could exacerbate economic challenges in an already volatile environment.
"When that money has been coursing through the economy over many years, and now, potentially it will be reduced or stopped in many ways, has got to be negative for the economy," Cohen remarked.
Cohen's commentary underscores a broader apprehension about current economic policies and their potential impact on growth. As he warns of a possible correction in the market, investors and policymakers alike may need to weigh these predictions carefully against the backdrop of ongoing economic shifts.