From Yahoo Finance: 2025-05-31 15:13:00

Veteran fund manager Doug Kass accurately predicted the top and bottom of the market in early 2025, despite surprising gains in the S&P 500 following a steep drop in April. Kass’s recent update on stocks signals a bearish outlook due to economic slowdown, inflation, job losses, and global uncertainty.

Kass warns that the US economy’s slowdown will impact corporate revenue and profit growth, influencing stock market valuations. Inflation remains above the Fed’s 2% target, with core CPI at 2.8% and core PCE at 2.5% in April. Despite recent rate cuts, job losses have increased, with over 602,000 layoffs announced this year.

Amidst economic challenges and trade war tensions, the stock market has seen a 20% return since April 8, despite lingering tariffs on key trading partners. Kass’s bearish stance is rooted in global economic uncertainty and concerns about American exceptionalism, with frothy valuations and potential downside risks for the S&P 500.

Kass predicts a less than 5% upside compared to a potential 10%-15% downside for the S&P 500, citing inflated valuations and expectations for economic and profit growth. The bearish outlook reflects concerns about structural uncertainties, slow growth, and sticky inflation in the economy.

Read more: Veteran fund manager who predicted April rally updates S&P 500 forecast