Morgan Stanley Warns Market May Be Overlooking Tariff Fallout

Chris Toomey, a senior executive at Morgan Stanley, believes U.S. markets are turning a blind eye to the economic drag that could emerge from renewed tariff policies tied to Trump administration.

Speaking in a recent CNBC interview, Toomey said that while equity benchmarks like the S&P 500 are flirting with record highs, the market appears to be pricing in overly optimistic scenarios.

“Investors are behaving as if the most favorable outcomes are guaranteed,” he warned, referencing expectations of widespread 10% tariffs and steeper 30% duties on Chinese imports.

Toomey also flagged the growing risk of stagflation—a toxic mix of slowing economic growth, persistent inflation, and elevated unemployment.

READ MORE:

Pepe Price Prediction: Is PEPE About to Lose 60% of Its Value?

He pointed to the diverging performance between tech giants and the broader S&P 500, saying firms exposed to China are already feeling the squeeze.

While sluggish GDP could eventually prompt the Federal Reserve to consider rate cuts in 2026, Toomey emphasized that current conditions could first strain corporate margins and weigh on consumer demand.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.