Billionaire Steven Cohen warns of possible recession due to tariffs and Fed actions

From Yahoo Finance: 2025-05-15 10:37:00

The stock market has seen a significant rally since Trump paused reciprocal tariffs on April 9, with the S&P 500 and Nasdaq surging 18% and 25%, respectively. However, not everyone, including billionaire hedge fund manager Steven Cohen, is convinced that stocks and the U.S. economy are out of the woods.

The Federal Reserve’s efforts to balance low unemployment and inflation have been challenging, with interest rate changes impacting both factors. Recent rate hikes have lowered inflation but caused unemployment to rise, with more than 602,000 layoffs this year, the most since Covid.

Trump’s tariffs, including those on China, have added uncertainty to the economy. While some tariffs have been rolled back as negotiations progress, they still pose a burden on the economy. Cohen, with decades of experience, believes there’s a 45% chance of a recession and expects GDP growth to slow.

Cohen predicts the S&P 500 may retest its April lows, and the economy could face a significant slowdown. He does not anticipate quick action from the Fed to support the economy, as concerns about inflation from tariffs persist. Rising bond yields may also present challenges for stocks, as they become more competitive against Treasuries.



Read more at Yahoo Finance: Billionaire Steven Cohen sends hard-nosed message on US economy, stocks