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Steve Cohen Voices Concerns Over U.S. Economic Outlook

Steve Cohen, the billionaire investor and head of Point72, recently expressed his growing skepticism regarding the future of the U.S. economy during an interview with CNBC on April 3, 2024. His remarks come amidst a climate characterized by rising tariffs, stringent immigration policies, and federal expenditure reductions driven by the Department of Government Efficiency.

For the first time in an extended period, Cohen indicated that he has adopted a bearish perspective on the economy. He attributed his concerns to the current administration’s assertive trade strategies implemented under President Donald Trump, which he fears could ignite inflationary pressures and dampen consumer spending. Furthermore, Cohen highlighted the potential negative impacts of the administration’s immigration policies, suggesting that a reduction in the workforce could lead to economic constraints.

“Tariffs cannot be positive, okay? I mean, it’s a tax,” Cohen stated during his appearance at the FII Priority Summit in Miami Beach, Florida. He further commented on the slowing pace of immigration, which he believes will hinder the growth of the labor force compared to recent years.

Additionally, Cohen criticized the cost-cutting initiatives championed by tech entrepreneur Elon Musk, particularly regarding their impact on the economy. Musk’s ambition to slash federal spending by $2 trillion has raised concerns among some investors, including Cohen, who warned that such reductions could have severe repercussions.

“When that money has been coursing through the economy over many years, and now, potentially it will be reduced or stopped in many ways, has got to be negative for the economy,” Cohen elaborated.

The hedge fund manager anticipates a pullback in the stock market, considering the uncertain macroeconomic landscape. He predicts that U.S. economic growth might decline from 2.5% to around 1.5% in the latter half of the year.

“I think we’re seeing the regime shift a little bit. It may only last a year or so, but it’s definitely a period where I think the best gains have been had and wouldn’t surprise me to see a significant correction,” remarked Cohen. However, he clarified that he does not foresee a catastrophic downturn, implying that the market might undergo a period of adjustment rather than facing a complete collapse.

Source
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