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.
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.
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