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Yahoo
3 days ago
- Business
- Yahoo
Veteran fund manager who predicted April rally updates S&P 500 forecast
Veteran fund manager who predicted April rally updates S&P 500 forecast originally appeared on TheStreet. It's been quite a rally. After stocks were deeply oversold in early April following what President Donald Trump called his Liberation Day tariff reveal, the S&P 500 has posted rip-roaring returns, gaining 20% in about six weeks. The rally caught many investors off guard. The potential for tariffs to increase inflation, zapping economic activity and corporate profitability, had sent stocks down 19%, just shy of bear-market territory. One investor who wasn't surprised was the Wall Street veteran hedge fund manager Doug Kass. 🔥 💰 Kass has been investing professionally since the early 1970s. His career, which includes a stint as research director for billionaire Leon Cooperman's Omega Advisors, has enabled him to make several savvy calls, including forecasting the bull market top in 2021 and bear market low in 2022. More recently, Kass correctly predicted a stock market reckoning this year in December and accurately called for the S&P 500 to bottom after its tariff-driven selloff in April. Kass updated his view on stocks this week, and his latest thoughts may frustrate some investors. The US economy has slowed markedly from its pace last summer, and that should be bad news for the S&P 500, given corporate revenue and profit growth are cornerstones of stock market valuation. The economy's headwinds include shifts in consumer spending toward essentials from discretionary buys amid sticky inflation; a weak jobs market, and eroded consumer and business uncertainty associated with stiff tariffs and mounting US debt adds to the pressures. In short, the backdrop isn't nearly as favorable as it was for stocks in 2023 and 2024, when optimism that the Federal Reserve would shift from hawkish to dovish monetary policy and growth in spending on artificial intelligence fueled back-to-back 20%-plus returns for the S&P 500. Inflation has retreated since it peaked above 8% in 2022. However, core inflation remains above the Fed's 2% target. The latest core Consumer Price Index and Personal Consumption Expenditures data show inflation at 2.8% and 2.5% in April, respectively. Meanwhile, the Fed's rate cuts last September, November and December have yet to reverse recent job losses. The unemployment rate has increased to 4.2% from 3.4% in 2023. According to Challenger, Gray & Christmas, companies have announced over 602,000 layoffs this year, up 87% from last year. Given inflation and jobs data, it's little wonder consumers feel uneasy, especially amid a turbulent sea of trade war news. The Conference Board's Expectations Index improved last month on hopes of China trade negotiations, but at 72.8 it remains below the 80 threshold commonly found ahead of a recession. Despite all the challenges, the stock market has marched higher since April 9, when President Trump reversed course and paused many of the reciprocal tariffs announced on April 2. However, 25% tariffs remain on Canada, Mexico and autos, and a 30% tariff on China (down from 145% previously). The recent decision by the Court of International Trade blocking most of Trump's tariffs is primarily seen as temporary, with plenty of levers available to the White House to continue its trade war. (In fact, a federal appeals court has delayed the trade court's block on the tariffs as it considers the case.) Yet the stock market has largely shrugged, with the S&P 500 returning 20% from its April 8 low, including a month-to-date 6% return in May. In December, Kass correctly forecast that stocks had run too fast and that the S&P 500 was due for a pullback of 15%. Initially, Kass was wrong, as the S&P 500 rallied into mid-February. But he continued to beat the bearish drum, a savvy move given the S&P 500's 19% slide through early April. More Economic Analysis: Hedge-fund manager sees U.S. becoming Greece A critical industry is slamming the economy Reports may show whether the economy is toughing out the tariffs The stock market's drop was rapid and steep, prompting Kass to correctly pivot to bullish in April, citing the likelihood of an oversold rally. Now that we've received those expected gains, Kass has shifted again, taking a decidedly bearish tone. "I am respectful of the market's extraordinary price momentum over such a short-term time frame; however, I plan to put a larger short stake in the ground," wrote Kass in a post on TheStreet Pro. "Going against the consensus grain and the herd is nothing new to me." Kass's bearishness is rooted in the rise of global economic uncertainty and the potential threat to the concept of American exceptionalism. "Political and geopolitical polarization and competition will probably translate into less centrism and, in turn, a reduced concern for deficits," wrote Kass. "This will create structural uncertainties, fiscal sloppiness, and worldwide imprudence. It will also create the possibility that bond markets 'disanchor.'" Kass says valuation has once again become frothy, given that the forward price-to-earnings multiple is back above 21, according to FactSet. That elevated p/e multiple is problematic if the economy suffers stubborn inflation and slow growth. "I, however, still see valuations and consensus expectations for economic and corporate profit growth inflated," wrote Kass. "So, look for the soft data to weaken into the hard data as the housing market slows and the vulnerability of the middle class is revealed. Expect below trend-line economic growth with sticky inflation lie ahead ("slugflation")." How far could the S&P 500 drop if things worsen? "I view less than 5% upside compared to 10%-15% downside. This is an increasingly unattractive ratio of nearly three to one," said fund manager who predicted April rally updates S&P 500 forecast first appeared on TheStreet on May 31, 2025 This story was originally reported by TheStreet on May 31, 2025, where it first appeared.
Miami Herald
3 days ago
- Business
- Miami Herald
Veteran fund manager who predicted April rally updates S&P 500 forecast
It's been quite a rally. After stocks were deeply oversold in early April following what President Donald Trump called his Liberation Day tariff reveal, the S&P 500 has posted rip-roaring returns, gaining 20% in about six weeks. The rally caught many investors off guard. The potential for tariffs to increase inflation, zapping economic activity and corporate profitability, had sent stocks down 19%, just shy of bear-market territory. One investor who wasn't surprised was the Wall Street veteran hedge fund manager Doug Kass. This Memorial Day, get $100 off TheStreet Pro - our best deal of the summer won't last long! Your portfolio will thank you Kass has been investing professionally since the early 1970s. His career, which includes a stint as research director for billionaire Leon Cooperman's Omega Advisors, has enabled him to make several savvy calls, including forecasting the bull market top in 2021 and bear market low in 2022. More recently, Kass correctly predicted a stock market reckoning this year in December and accurately called for the S&P 500 to bottom after its tariff-driven selloff in April. Kass updated his view on stocks this week, and his latest thoughts may frustrate some investors. The US economy has slowed markedly from its pace last summer, and that should be bad news for the S&P 500, given corporate revenue and profit growth are cornerstones of stock market valuation. The economy's headwinds include shifts in consumer spending toward essentials from discretionary buys amid sticky inflation; a weak jobs market, and eroded consumer and business confidence. Related: Stock market tumbles after uncommon event The uncertainty associated with stiff tariffs and mounting US debt adds to the pressures. In short, the backdrop isn't nearly as favorable as it was for stocks in 2023 and 2024, when optimism that the Federal Reserve would shift from hawkish to dovish monetary policy and growth in spending on artificial intelligence fueled back-to-back 20%-plus returns for the S&P 500. Inflation has retreated since it peaked above 8% in 2022. However, core inflation remains above the Fed's 2% target. The latest core Consumer Price Index and Personal Consumption Expenditures data show inflation at 2.8% and 2.5% in April, respectively. Meanwhile, the Fed's rate cuts last September, November and December have yet to reverse recent job losses. The unemployment rate has increased to 4.2% from 3.4% in 2023. According to Challenger, Gray & Christmas, companies have announced over 602,000 layoffs this year, up 87% from last year. Given inflation and jobs data, it's little wonder consumers feel uneasy, especially amid a turbulent sea of trade war news. The Conference Board's Expectations Index improved last month on hopes of China trade negotiations, but at 72.8 it remains below the 80 threshold commonly found ahead of a recession. Despite all the challenges, the stock market has marched higher since April 9, when President Trump reversed course and paused many of the reciprocal tariffs announced on April 2. However, 25% tariffs remain on Canada, Mexico and autos, and a 30% tariff on China (down from 145% previously). The recent decision by the Court of International Trade blocking most of Trump's tariffs is primarily seen as temporary, with plenty of levers available to the White House to continue its trade war. (In fact, a federal appeals court has delayed the trade court's block on the tariffs as it considers the case.) Yet the stock market has largely shrugged, with the S&P 500 returning 20% from its April 8 low, including a month-to-date 6% return in May. In December, Kass correctly forecast that stocks had run too fast and that the S&P 500 was due for a pullback of 15%. Initially, Kass was wrong, as the S&P 500 rallied into mid-February. But he continued to beat the bearish drum, a savvy move given the S&P 500's 19% slide through early April. More Economic Analysis: Hedge-fund manager sees U.S. becoming GreeceA critical industry is slamming the economyReports may show whether the economy is toughing out the tariffs The stock market's drop was rapid and steep, prompting Kass to correctly pivot to bullish in April, citing the likelihood of an oversold rally. Now that we've received those expected gains, Kass has shifted again, taking a decidedly bearish tone. "I am respectful of the market's extraordinary price momentum over such a short-term time frame; however, I plan to put a larger short stake in the ground," wrote Kass in a post on TheStreet Pro. "Going against the consensus grain and the herd is nothing new to me." Kass's bearishness is rooted in the rise of global economic uncertainty and the potential threat to the concept of American exceptionalism. "Political and geopolitical polarization and competition will probably translate into less centrism and, in turn, a reduced concern for deficits," wrote Kass. "This will create structural uncertainties, fiscal sloppiness, and worldwide imprudence. It will also create the possibility that bond markets 'disanchor.'" Kass says valuation has once again become frothy, given that the forward price-to-earnings multiple is back above 21, according to FactSet. That elevated p/e multiple is problematic if the economy suffers stubborn inflation and slow growth. "I, however, still see valuations and consensus expectations for economic and corporate profit growth inflated," wrote Kass. "So, look for the soft data to weaken into the hard data as the housing market slows and the vulnerability of the middle class is revealed. Expect below trend-line economic growth with sticky inflation lie ahead ("slugflation")." How far could the S&P 500 drop if things worsen? "I view less than 5% upside compared to 10%-15% downside. This is an increasingly unattractive ratio of nearly three to one," said Kass. Related: Fed official sends strong message about interest-rate cuts The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
28-04-2025
- Business
- Yahoo
Veteran fund manager who correctly forecast stocks' drop and pop sends blunt 6-word message on what's next
The stock market has been on a wild ride in April. It came into the month already struggling, but President Trump's trade war has put investors on a roller coaster ride. After announcing widespread tariffs on April 2, so-called Liberation Day, the S&P 500 and Nasdaq tumbled, falling 12% and 13% through April 8. Then, a partial about-face kicked off optimism that the trade war wouldn't be long-lasting, sparking a rally that's since lifted the two major indexes by 9% and 11%. 💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💵 The dramatic drop and subsequent pop likely caught many investors offside. Longtime hedge fund manager Doug Kass wasn't among them. Kass's career spans roughly 50 years, including a stint as research director for Leon Cooperman's Omega Advisors. In December, he correctly predicted stocks would tumble in 2025, then he accurately switched gears, buying stocks near April's lows. His prescient predictions suggest it's wise to heed what Kass says may happen to the stock market next. The Fed is tasked with maintaining low unemployment and interest rates, a Herculean task nowadays, given signs of a weakening jobs market and tariff risks sparking Fed's dual mandate is often at odds. Increasing rates can slow inflation, like in 2023, but slower growth can mean lost jobs. Conversely, lowering interest rates can reduce unemployment, but the subsequent lift in economic growth kindles inflation. The competing goals are particularly problematic this time around, given that unemployment has crept higher to 4.2% from 3.4% in 2023, and CPI inflation of 2.4% remains above the Fed's 2% target even as tariffs threaten to raise prices on everything from clothing to cars. The dynamic isn't lost on Fed Chairman Jerome Powell, who is walking a tightrope on interest rates. 'We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension," said Powell last week in a speech that most believe left the window open to interest rate hikes if tariff-driven inflation doesn't prove temporary. Powell's reticence to cut rates amid a slate of data suggesting the economy is already on a path to stagflation or recession has drawn the ire of President Trump, who has amplified his criticism of Powell. 'With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,' wrote Trump on his social media site, Truth tension has made many worry that the President may challenge the Fed's independence. The Fed is designed to set policy independently, without input from politicians and their lobbyists. The dust-up caused stocks to drop, prompting President Trump to say on April 22 he wouldn't try to fire Powell. Nevertheless, if economic data and consumer sentiment worsen, suggesting the Fed is behind the curve on cutting rates, the war of words may escalate, adding to the stock market's troubles. Kass's long career means he successfully navigated the inflation scare in the 1970s, the S&L crisis in the late 80s and early 90s, the Internet boom and bust, the Great Recession, the Covid pandemic, and 2022's bear say he's seen a thing or two over the past five decades is an understatement. That experience helped him correctly forecast the S&P 500's drop and recent relief rally. Unfortunately, Kass isn't convinced that stocks are done falling. 'I see limited upside from here,' wrote Kass bluntly on the X account for his hedge fund Seabreeze Partners. "My view is that the S&P has upside to 5500-5600. That is all. I plan to short aggressively into this target.' Kass's target doesn't comfort investors, given that the S&P 500 is trading at 5,444 on April 24. If he's correct again, stocks could rally another 1% to 3% before beginning yet another retreat. 'The markets are vulnerable to a possible retest of the lows,' wrote Kass in his TheStreet Pro Diary. 'The S&P Short Range Oscillator has risen to overbought at 3.02% vs. 0.67%, from substantially oversold a week or so ago.'Sign in to access your portfolio
Miami Herald
26-04-2025
- Business
- Miami Herald
Veteran fund manager who correctly forecast stocks' drop and pop sends blunt 6-word message on what's next
The stock market has been on a wild ride in April. It came into the month already struggling, but President Trump's trade war has put investors on a roller coaster ride. After announcing widespread tariffs on April 2, so-called Liberation Day, the S&P 500 and Nasdaq tumbled, falling 12% and 13% through April 8. Then, a partial about-face kicked off optimism that the trade war wouldn't be long-lasting, sparking a rally that's since lifted the two major indexes by 9% and 11%. Don't miss the move: Subscribe to TheStreet's free daily newsletter The dramatic drop and subsequent pop likely caught many investors offside. Longtime hedge fund manager Doug Kass wasn't among them. Kass's career spans roughly 50 years, including a stint as research director for Leon Cooperman's Omega Advisors. In December, he correctly predicted stocks would tumble in 2025, then he accurately switched gears, buying stocks near April's lows. His prescient predictions suggest it's wise to heed what Kass says may happen to the stock market next. The Fed is tasked with maintaining low unemployment and interest rates, a Herculean task nowadays, given signs of a weakening jobs market and tariff risks sparking inflation. Related: Veteran analyst sends blunt 11-word message on gold stocks The Fed's dual mandate is often at odds. Increasing rates can slow inflation, like in 2023, but slower growth can mean lost jobs. Conversely, lowering interest rates can reduce unemployment, but the subsequent lift in economic growth kindles inflation. The competing goals are particularly problematic this time around, given that unemployment has crept higher to 4.2% from 3.4% in 2023, and CPI inflation of 2.4% remains above the Fed's 2% target even as tariffs threaten to raise prices on everything from clothing to cars. The dynamic isn't lost on Fed Chairman Jerome Powell, who is walking a tightrope on interest rates. "We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension," said Powell last week in a speech that most believe left the window open to interest rate hikes if tariff-driven inflation doesn't prove temporary. Powell's reticence to cut rates amid a slate of data suggesting the economy is already on a path to stagflation or recession has drawn the ire of President Trump, who has amplified his criticism of Powell. "With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW," wrote Trump on his social media site, Truth Social. Related: Billionaire fund manager sends hard-nosed message on recession in 2025 The tension has made many worry that the President may challenge the Fed's independence. The Fed is designed to set policy independently, without input from politicians and their lobbyists. The dust-up caused stocks to drop, prompting President Trump to say on April 22 he wouldn't try to fire Powell. Nevertheless, if economic data and consumer sentiment worsen, suggesting the Fed is behind the curve on cutting rates, the war of words may escalate, adding to the stock market's troubles. Kass's long career means he successfully navigated the inflation scare in the 1970s, the S&L crisis in the late 80s and early 90s, the Internet boom and bust, the Great Recession, the Covid pandemic, and 2022's bear market. To say he's seen a thing or two over the past five decades is an understatement. That experience helped him correctly forecast the S&P 500's drop and recent relief rally. Unfortunately, Kass isn't convinced that stocks are done falling. "I see limited upside from here," wrote Kass bluntly on the X account for his hedge fund Seabreeze Partners. "My view is that the S&P has upside to 5500-5600. That is all. I plan to short aggressively into this target." Kass's target doesn't comfort investors, given that the S&P 500 is trading at 5,444 on April 24. If he's correct again, stocks could rally another 1% to 3% before beginning yet another retreat. "The markets are vulnerable to a possible retest of the lows," wrote Kass in his TheStreet Pro Diary. "The S&P Short Range Oscillator has risen to overbought at 3.02% vs. 0.67%, from substantially oversold a week or so ago." Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
13-04-2025
- Business
- Yahoo
Billionaire Investor Leon Cooperman Just Revealed How He's Navigating the Ongoing Tariff-Driven Sell-Off
For the last week, financial news programming has covered one particular topic non-stop: U.S. President Donald Trump's new tariff policies. It seems like every few minutes, a new economist, hedge fund manager, or business executive is being broadcast on television -- each providing a unique perspective on the effects these tariffs could have on the economy. Given the wide array of conflicting viewpoints, it's not surprising to see the capital markets witness sharp sell-offs and rebounds based on the latest breaking news headline. Amid all the chaos, some recent commentary from billionaire hedge fund manager and CEO of Omega Advisors Leon Cooperman stuck out to me. Let's take a look at his thoughts on the current market, and explore how his viewpoints can help investors navigate uncertainty during this heightened period of tension in the stock market. During a recent panel discussion on CNBC, Cooperman was asked about his thoughts on the tariffs, the ongoing market sell-off, and even some of his fund's specific positions. Cooperman admitted that he would not be shocked if stocks exhibit uninspiring returns for an "extended period." While that might suggest some opportunity to buy dips in depressed stock prices, Cooperman also made it clear that he's being careful right now. To be specific, he said he isn't buying the current weakness because he doesn't trust this level of extreme volatility. During the interview, Cooperman was asked what he thought would happen if the tariff policies were lifted or at least relaxed on some levels. He confidently replied by saying the markets would experience a short-term rally, but doubled down on his stance that investors may not have seen the bottom just yet. Well, on April 9, President Trump did in fact institute a pause on his initial tariffs -- replacing them with a 10% tariff for 90 days for many of the countries the U.S. trades with. The chart above illustrates the returns of the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average since April 2 -- the day President Trump announced his initial tariff agenda. Each of these indices dropped by at least 11%. However, just as Cooperman predicted, stocks began to rally quite dramatically following Trump's new tariff pause on April 9. While each index is still down since April 2, the rebound illustrated above was sharp, to say the least. Given that the markets tanked following the initial tariff announcement last week, it makes sense that shares would rally following some positive news, just as Cooperman suggested. However, in a way, neither of these actions necessarily makes sense on a fundamental level -- and perhaps this is why Cooperman says he isn't totally trusting the weakness in the market right now. What I mean by this is that the initial sell-off and current rally are both based purely on tariff narratives. News alone is not an inherent reason to buy or sell a stock. Rather, the constant ebbing and flowing of stock prices right now appears to be driven by emotion -- how investors are feeling based on a specific piece of news. The thing about tariffs is that they can change at the flick of a switch. For example, while President Trump relaxed his policies for most trade partners on April 9, he also doubled down on raising tariffs for China. This is important, because at any moment these policies could change once again -- and depending on the country or the specific goods targeted, it could have massive ripple effects on certain industries and end markets. I think Cooperman is right to remain suspicious. Right now, I think the current price action we're seeing is intensely rooted more in emotion than logic, making it incredibly challenging to navigate which stocks could present good value at this point. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $679,900!* Now, it's worth noting Stock Advisor's total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Billionaire Investor Leon Cooperman Just Revealed How He's Navigating the Ongoing Tariff-Driven Sell-Off was originally published by The Motley Fool Sign in to access your portfolio
