Morgan Stanley’s Chris Toomey believes the stock market is too optimistic, ignoring the real risks of Trump-era tariffs. He’s warning of potential trouble ahead.
Market Could Correct
Toomey, a managing director at Morgan Stanley, told CNBC that the market is likely to stay within a narrow trading range. He thinks the S&P 500, currently near 5,935 points, could even see a correction after its recent rally. He suggests the market has already priced in a best-case scenario regarding tariffs, ignoring the potential for worse outcomes. He specifically mentioned the possibility of widespread 10% tariffs and even 30% tariffs on goods from China as already factored into prices.
Stagflation Fears for Tech Giants
Toomey also expressed concern about stagflation – a combination of slow economic growth, high inflation, and high unemployment. He points to the performance of the “Magnificent Seven” tech giants and the broader S&P 500 as evidence, noting that companies with significant ties to China are struggling due to tariffs. He believes this points towards a potential stagflationary environment. If economic growth slows, he anticipates the Federal Reserve might cut interest rates next year to try and stimulate the economy.
Disclaimer: This information is for general knowledge and shouldn’t be considered investment advice. Always do your own research before making any investment decisions.
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