Steve Cohen Warns: Tariffs, DOGE's Cuts Threaten Economy, Market Correction Looms

The U.S. economy is facing headwinds from various fronts, according to Steve Cohen, the billionaire investor and CEO of Point72. In a recent interview, Cohen warned that the combination of punitive tariffs, immigration crackdowns, and federal spending cuts spearheaded by Elon Musk's DOGE could have a negative impact on the economy and potentially trigger a market correction.

Cohen, who has been bearish on the U.S. economy for the first time in a while, cited inflationary pressures and lower consumer spending as primary concerns. He also pointed out that a constrained supply of labor due to immigration crackdowns could exacerbate these issues. "Tariffs cannot be positive, okay? I mean, it's a tax," Cohen said, emphasizing the negative impact of tariffs on consumers and the economy.

The prominent hedge fund investor also took a jab at DOGE's cost-cutting moves, stating that they could only hurt the economy more. Musk has said his goal is to cut federal spending by $2 trillion, which Cohen believes will have a negative impact on the economy. "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 said.

Cohen believes that a pullback in the stock market could be likely given the uncertain macroeconomic environment. He sees the U.S. economy growth slowing down to 1.5% from 2.5% in the second 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," Cohen said. However, he also noted that he doesn't think it will be a disaster.



Investors should take note of Cohen's warnings and consider the potential impact of these factors on their portfolios. While the market may experience a correction in the short term, it's essential to maintain a long-term perspective and focus on fundamentals. Diversifying investments across sectors and asset classes can help mitigate risks associated with market volatility.

In conclusion, Steve Cohen's concerns about tariffs and DOGE's cuts highlight the potential challenges facing the U.S. economy and the stock market. Investors should be aware of these risks and consider adjusting their portfolios accordingly. By maintaining a long-term perspective and focusing on fundamentals, investors can navigate the market's volatility and position themselves for future growth.