- Steve Cohen warned of slower US economic growth and a "significant correction" in the markets.
- The billionaire investor cited tariffs, less immigration, and cuts to government spending.
- Cohen said that after a stellar run, the best gains for investors may be behind them.
Stocks could slump and economic growth might cool as the Trump administration's policies take effect, Steve Cohen said.
The hedge fund billionaire said Friday that this was "one of those moments where there's really a lot of uncertainty." He made the comments during a conversation at the Future Investment Initiative Institute summit in Miami Beach, Florida, a video of which was uploaded to YouTube.
Cohen, the founder of Point72 Asset Management, said that "tariffs cannot be positive" as they're effectively taxes. He said that one of the president's favorite foreign policy tools risked sparking "tit-for-tat" tariff retaliation between other countries and the US if the US imposed levies on their exports.
"On top of that, we have slowing immigration, which means the labor force will not grow as rapidly," Cohen said, likely nodding to the Trump administration's tighter restrictions on foreigners working in the US.
The New York Mets owner also highlighted the White House's DOGE office and its stated mission to root out fraud, waste, and abuse in the federal government.
Cohen framed its efforts as austerity and said that "when that money's been coursing through the economy over many years and now potentially it will be reduced or stopped in many ways, it has to be negative for the economy."
'Pretty negative'
The Wall Street heavyweight said his team expected US economic growth to slow from 2.5% to 1.5% in the second half of this year but unemployment to fall because of slower workforce growth.
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The "reality is you've got a brew of sticky inflation, slowing growth, and austerity in the government, and so I'm actually pretty negative for the first time in a while," Cohen said.
The veteran investor said he didn't anticipate a "disaster" but did expect a substantial sell-off as market sentiment faltered. He said it's "definitely a period where I think the best gains have been had, and it wouldn't surprise me to see a significant correction."
The S&P 500 stock index has surged more than 50% since the start of 2023, fueled by stocks such as Nvidia's, which has gained roughly 800% gain in that period, though it suffered a 1.7% slide on Friday.