Steve Cohen says tariffs and DOGE’s cuts are negative for economy, market correction could be soon

Billionaire investor Steve Cohen doubled down on his negative view of the U.S. financial system attributable to a backdrop of punitive tariffs, immigration crackdown and federal spending cuts spearheaded by the so-called Division of Authorities Effectivity.

The chairman and CEO of hedge fund Point72 stated he turned bearish for the primary time shortly after President Donald Trump’s aggressive commerce coverage made him fear about inflationary pressures and decrease client spending. In the meantime, his robust stance on immigration could imply a constrained provide of labor, he stated.

“Tariffs can’t be optimistic, okay? I imply, it is a tax,” Cohen stated Friday on the FII Precedence Summit in Miami Seaside, Florida. “On high of that, we’ve slowing immigration, which suggests the labor power is not going to develop as quickly as … the final 5 years and so.”

The outstanding hedge fund investor took a stab at DOGE’s cost-cutting strikes led by Elon Musk, saying they could solely harm the financial system extra. Musk has stated his objective is to minimize federal spending by $2 trillion.

“When that cash has been coursing by the financial system over a few years, and now, probably it’ll be lowered or stopped in some ways, has received to be negative for the financial system,” Cohen stated.

Cohen believes a pullback within the inventory market could be doubtless given the unsure macroeconomic atmosphere. He sees the U.S. financial system’s progress slowing right down to 1.5% from 2.5% within the second half of the 12 months. 

“I feel we’re seeing the regime shift somewhat bit. It might solely final a 12 months or so, but it surely’s undoubtedly a interval the place I feel the perfect positive factors have been had and would not shock me to see a major correction,” Cohen stated. “I do not suppose it may be a catastrophe.”