Peter Berezin, Chief Global Strategist at BCA Research, stated that since President Trump's election victory last week, the probability of a recession in the usa has increased.

In a report last Friday, Berezin raised the probability of an economic recession from 65% to 75%, citing the new trade war risks under Trump's leadership.

"The prospect of a new trade war far outweighs the more pro-business parts of Trump's agenda," Berezin said. "Given the pre-election weakness in the labor market, the likelihood of an economic recession has increased."

During the campaign, Trump proposed universal tariffs of 10% to 20% on imports to the usa and tariffs of 60% on china's commodities.

Berezin said that these tariffs could dampen business investment, reduce consumers' real disposable income, which would be a double blow to the economy.

He cited a study from the Yale University Budget Lab estimating that Trump's proposed tariffs would reduce the real disposable income of middle-income families in the usa by $1,900 to $7,600.

Some speculate that Trump's tariff proposals are just a bluff to gain leverage in negotiations with other countries, but Berezin is not certain.

Bernstein said: "There is still controversy over whether Trump will follow through with these threats, and market participants generally believe that in most cases he will not do so. But I suspect the consensus is too optimistic."

Bernstein also mentioned that if Trump's proposed tax cut plan is passed, it may increase the EPS of the S&P 500 index by 4%, but this is lower than the 5% growth the index achieved in the past week. This indicates that the proposed tax reduction measures have already been priced in by the market.

In addition, Bernstein expressed concern about the surge in U.S. bond yields since Trump's election, stating that bond yields have reached a "restrictive level," which could pose downward pressure on economic growth.

Bernstein said, "The weak state of the housing market sends a signal to investors that monetary policy remains restrictive," emphasizing the significant slowdown in housing sales activity.

All these factors have led Bernstein to adopt a pessimistic view of the stock market.

Bernstein said: "Taking all factors into consideration, these factors lead us to recommend a moderate reduction in shareholding." He added that once clearer evidence of an economic downturn emerges, he plans to recommend adjusting to a "maximum reduction in shareholding."

Editor/ping