Odaily News Veteran strategist and one of the biggest bulls in U.S. stocks, Ed Yardeni, said the combined impact of all tariffs is increasingly likely to lead to stagflation. Tariffs will be borne by foreign exporters to the United States, U.S. importers, U.S. consumers, or a combination of them. The result will be higher prices and lower corporate profit margins than without tariffs. Over the past three years, the U.S. economy has been remarkably resilient to tightening monetary policy. But now consumers are losing confidence that the economy will remain resilient under Trump's tariffs. The latest batch of data shows that stagflation concerns are already eroding the outstanding performance of the U.S. economy, which has not fallen into a recession since the pandemic lockdown in early 2020.
Yardeni said the probability of stagflation has risen to 45%, which also reflects the possibility that the current correction in the US stock market may evolve into a full-blown bear market. In other words, if the economy experiences stagflation, the stock market is expected to enter a bear market. (Jinshi)