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1. “End of the tariff clown show”?

Donald Trump insists he’ll never change the trade policies that have plunged global markets into turmoil.

To Marko Kolanovic, former head of strategy at JPMorgan, it looks like the president is close to caving to that pressure.

However, 62% of Americans invest in equities and the market is impacting “Main Street," he said. Even before this market setback, we were starting to see more and more trepidation by consumers, slowing down purchases. All of this, this market setback, is going to freeze more and more consumption."

Larry Fink, CEO of Blackrock, the world’s largest asset manager, said most CEOs he talked to said we're already in a recession.

2. Market stress has reached panic levels.

Investors are repricing growth expectations and equity valuations after the US president slapped tariffs on all trading partners. Volatility has spiked as stock prices plummet. The VIX futures curve is now reaching levels unseen since August 2024, when recession fears last rattled markets.

3. The market is pricing in a global recession, says Deutsche Bank strategist George Saravelos.

“Investors previously assumed tariffs were merely a tool for negotiation, but now the probability of a US bear market is rising,” say UBS strategists including Nicolas Le Roux. “The tariffs announced are larger, not priced, and coming at a bad time.”

Strategists are ripping up their previous forecasts as the meltdown continues. Oppenheimer’s John Stoltzfus cut his year-end S&P 500 target to 5,950 points from 7,100, while Morgan Stanley’s Michael Wilson warned the benchmark could sink another 7%-8% if the Trump administration stays firm on levies.

Here is JPMorgan’s scenario analysis.

4. Goldman Sachs strategists warned that a recession is not yet priced in.

Here is their sensitivity of S&P 500 returns to EPS and P/E scenarios.

Why not recession EPS and a 2018 multiple of 14...and we get to 3100...?

5. Consensus earnings expectations do not reflect tariff risk.

Given the recent escalation in broad-based tariffs, corporate estimates remain too elevated and vulnerable to downward revisions.

Earnings estimates are still at +9% net income growth in 2025.

Mag7 expected earnings growth is still at +14.4%!

If tariffs sends US GDP growth below 2%, S&P 500 EPS estimates are 20% too high.

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