- Morgan Stanley’s Mike Wilson argues that the market downturn isn’t primarily due to tariffs but rather to declining earnings revisions, stricter immigration policies, and the Federal Reserve’s stance, with investors reacting negatively to President Trump’s apparent indifference toward stock performance. Some, like BlackRock CEO Larry Fink, see the dip as a buying opportunity.
While President Trump’s ever-evolving tariff policy isn’t exactly helping markets right now, Morgan Stanley chief investment officer Mike Wilson says they aren’t the root cause of economic uncertainty.
What is truly causing analysts and economists to pause is the realization that the White House “doesn’t care” about the stock market, Wilson said.
Ahead of his inauguration the stock market was one of President Trump’s favorite talking points, and he often attributed the gains made in 2024 to confidence in his election win.
Speaking after he won the Oval Office, the rhetoric continued. For example, in early January he told reporters: “Since my election, the stock market has set records. The S&P 500 index has broken above 6,000 points for the first time ever, never even close.”
Yet in more recent weeks with criticism of his tariff plan piling up, President Trump has been relatively less occupied with the health of the market—even admitting there will be “a little disturbance, but we’re okay with that.”
Wall Street is certainly not okay with it, however: The market has corrected itself from its peak in November last year, with GDP expectations being revised down and inflation figures being bumped up.
Speaking on CNBC’s Fast Money, Wilson explained: “Everybody’s talking about tariffs right now but the reason markets are lower over the course of the last three or four months has nothing to do with tariffs.
“It’s mostly to do with the fact that earnings revisions have rolled over, the Fed stopped curling rates, you had stricter enforcement on immigration, you have DOGE. All those things are growth negative. And then tariffs are the final piece that…got people really bearish in the end.”
But the typically bearish investment officer added: “I would say the thing that really got the S&P going down at the very end was when it became clear that the president does not care about the stock market, at least for now. That lack of a Trump put was really new news to people.”
Wilson’s take is a far cry from Wall Street’s initial jubilation over Trump’s election, when JPMorgan CEO Jamie Dimon said bankers would be “dancing in the street” as they learned that the regulation-adverse, business-friendly politician would be in the Oval Office.
Wilson’s revised take was recently echoed by JPMorgan Private Bank’s U.S. head of investment strategy, Jake Manoukian.
In an exclusive interview with Fortune earlier this month, Manoukian said: “So far the first…50 days of Trump is almost the opposite of what the expectations were in November, December, January. That came at a time when the S&P 500 was trading at 22 times forward P/E multiple, baking in a lot of enthusiasm around an acceleration in corporate earnings and a re-engagement of capital market activity.
“It’s the confluence of the disconnect between the expectations and reality that needs to be realigned, and that’s manifesting itself through a selloff in the S&P 500 that’s been concentrated in some of the most popular, highly valued names.”
Buying the dip
Whether or not the market downturn presents an opportunity depends on who you ask. Among those who are more bullish on America, the answer is a clear yes: They see the correction as something of a discount.
BlackRock CEO Larry Fink, for example, said he’d be cashing in on the lower share prices. And Commerce Secretary Howard Lutnick has been hawking “cheap” Tesla shares.
Unusually for Wilson, who often errs on the side of caution, he too saw the correction as an opportunity to buy.
“The one thing we felt good about this week was that the ‘Mag 7’ or ‘Fateful 8’ revisions are starting to sort of bottom out a bit,” Wilson added. “The other trade that we advocated this week was that the U.S. could have a relative move back against Europe because as we go into second quarter earnings right now with the dollar weaker, that’s going to be a headwind for Europe earnings and actually a tailwind for some of the larger cap names in the U.S.”
