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US stocks rebounded smartly yesterday even as the Dow Jones still closed in the red. The recovery looks set to continue today with the Dow up 1,000 points in pre-markets. Meanwhile, several experts have advised caution despite the recovery.
Steve Eisman of “The Big Short” fame who famously bet against the US housing market ahead of the 2008 crash, warns investors against adventurism.
“The issue is that everybody of our social class took Econ 101, and we were all taught the same thing: Trade good, tariffs bad, trade war terrible,” said Eisman speaking with CNBC. He added, “Now, you have a president of the United States who doesn’t seem to accept that paradigm, and people find that extremely jarring.”
According to Eisman, “There’s the people in the markets who are upset that they have lost money.” He admitted, “I’m not going to kid you. I’m one of those people. I’m long only. I’ve lost plenty.”
Gundlach Sees US Stocks Falling Further
Jeffrey Gundlach of DoubleLine Capital sees US stocks falling more from these levels. “The extent to which investors hold cash, I would continue to do that until we get something more of a sustained bottom. … I’m looking for 4,500 on the S&P 500,” said the fund manager.
Gundlach believes that tariff uncertainty will stay for some time and won’t go away in a hurry. “He’s (Trump) keeping people guessing, and he’s not going to back down. I don’t think so,” Gundlach said. “So, this is something that is going to have to play out, and we’re going to be dealing with this, I would say, certainly, for weeks or months, and not just days,” said Gundlach.
US Stocks Whipsaw Amid Tariff Uncertainty
On April 2, US President Donald Trump slapped reciprocal tariffs on over 180 countries. While a blanker tariff of 10% has been imposed on all the countries, the rate varies by every country. China for instance was slapped with a 34% tariff which coupled with the 20% tariff that Trump previously announced took the total tariffs on China to 54%.
China announced counter-tariffs of 34% on imports from the US. Trump, who had previously warned countries against retaliation, threatened China with more tariffs. “If China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th. Additionally, all talks with China concerning their requested meetings with us will be terminated!” wrote Trump in his post on Truth Social.
Meanwhile, US stocks have whipsawed amid the tariff uncertainty and while there has been a remarkable recovery from yesterday’s lows, some experts believe that markets haven’t bottomed yet.
Leon Cooperman Says Stocks Have Not Bottomed Yet
Billionaire investor Leon Cooperman believes that US stocks have not bottomed yet. “I would be careful,” said Cooperman. He added, “I would sell strength in the market and only buy weakness. And I’m not really buying much weakness, because I don’t really trust the environment.”
“I think there’s too much confidence in the system … and we’re correcting that right now. It’s very clear to me the president has decided the best way to get inflation, interest rates down is to take a recession,” said Cooperman.
Experts Warn About Repercussions of Tariffs
Several observers have warned of repercussions from Trump’s tariffs. Speaking at a business journalism conference in Arlington, Va. Fed chair Jerome Powell said, “Higher tariffs will be working their way through our economy and are likely to raise inflation in coming quarters.”
He added, “While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected, and the same is likely to be true of economic effects, which will include higher inflation and slower growth.”
Sounding an alarm over the long-term impact of Trump’s tariffs, Powell stressed, “The size and duration of these effects remain uncertain. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”
Meanwhile, Powell yet again signaled a wait-and-watch approach to future rate cuts and said, “It feels like we don’t need to be in a hurry. It feels like we have time. He added, “Inflation is going to be moving up, and growth is going to be slowing, but to me it’s not clear at this time what the appropriate path for monetary policy is going to be. We’re going to need to wait and see how this plays out before we make those adjustments.”
Recession Fears Rise
Several economists have warned of a recession amid the escalating global trade war. JPMorgan for instance has raised the odds of a US recession this year to 60% as compared to 40% before the tariff announcement. In his note, Bruce Kasman, head of global economic research said, “These policies, if sustained, would likely push the US and possibly global economy into recession this year.”
Allianz’s Chief Economic Advisor Mohamed El-Erian has also warned about the growing risk of a recession. Separately a Deutsche Bank survey shows a nearly 50-50 chance of a recession. UCLA Anderson Forecast has also recently issued its first-ever recession watch amid concerns over Trump’s policies.
