| The stock market is plummeting on fears of slower growth and higher inflation from President Donald Trump's tariffs. Bloomberg News reporter Alexandra Semenova sat down with one of Wall Street's most notorious bears to assess the damage and discuss the future. Plus: H Mart's executives aren't crying, and the makers of Wegovy and Zepbound face booming demand. If this email was forwarded to you, click here to sign up. Marko Kolanovic offers ample evidence in support of the old quip that pessimists are never wrong, but sometimes they're early. The former chief market strategist at JPMorgan Chase & Co., whose abrupt exit from the bank last summer shocked analysts and investors, had been one of Wall Street's most vocal skeptics. His bearish calls proved wrong in 2023 and 2024, but he continued warning of a momentous crash in US equities even as the biggest shops in finance dropped their gloomy predictions. After leaving JPMorgan, Kolanovic took to social media, where it was easier to ignore him despite his growing legions of followers (almost 21,000 on X as of today). Now, the theoretical physics Ph.D. who rose to fame for a series of prophetic calls over the past decade, is again looking prescient. We chatted with him Monday afternoon to get his take on where things stand—and where they're headed. (This interview was edited for length and clarity.) What's driving this selloff? People thought tariffs were just going to be a negotiating tool, but President Donald Trump has been clear that he actually wants to change the global manufacturing landscape. So everything is being repriced. Then there was a much larger issue with the momentum of expensive technology stocks. At the same time, there has been a rotation into value shares and into Europe and China. The S&P 500 has fallen about 9% from its peak, to just over 5,600 at Monday's close. How much more pain could there be? The trend is still negative since questions around tariffs, economic growth and geopolitics are far from being resolved. If, by some miracle, there is a complete change in the administration's approach toward trade—which I doubt—we could stabilize somewhere around 5,500. But I think we could go into the low 5,000s, and if there is a recession it could fall into the 4,000s. Do you think Trump will come to the rescue if the slump deepens? Trump is prioritizing his agenda over markets and has clearly communicated that. Treasury Secretary Scott Bessent has said markets under President Joe Biden posted back-to-back 20% gains and he still lost the election, so the stock market isn't everything. If we go down 200 more points, perhaps Trump will say something positive and the market will bounce back. But then he will go back to his agenda.  Kolanovic, in 2018. Source: Bloomberg What would you advise investors to do? I was recommending earlier that people raise cash. We are quite a bit lower, so raising cash might be less effective at this point but is probably still prudent. We saw a lot of investors jumping into Europe and Chinese technology stocks, but that's very dangerous, because these are at highs and you may get slammed. I do think markets will go lower globally. Increased weight in bonds is not bad, because if you do get a recession, I think bonds will rally. How do you see this unfolding? Does it come in the form of a big crash, or will the market continue making small moves lower? The best-case scenario is you have a rotation, domestic into international; growth into value; maybe small caps. That would leave us with a basically flattish market—if you don't have an economic slowdown or some major political risk. But you could also have a violent reset in valuations and flows. Or it can be something that takes a life of its own, killing consumer confidence and turning into a recession. It's hard to predict, but I would say with some confidence that we will not repeat last year's gain. How would you rank risks right now? What's keeping you up at night? One would be related to politics and policies, including domestic and international geopolitics, particularly the trade war. A second concern is how the US political situation evolves. In 2020, there was a lot of political friction in the US. It's hard for me to believe that things will be smooth sailing this time. Another cluster of risks is related to monetary policy: Inflation is still sort of around, and the Fed isn't cutting rates. Then you have real estate. It's puzzling for me how it hasn't cracked or buckled yet, but I think that could happen. You're one of Wall Street's few prominent contrarians. How does it feel to be right but early? Ideally, you want to be right, but you can't always be. The AI trend was definitely more powerful than I expected. In retrospect it would have probably been better to be more flexible. But I am still cautious about the market. Trees don't grow to the sky, and some of these valuations seem crazy. In my old job we needed to publish something every week, and if every week you're reiterating your view, it looks like you're beating the drum, which I didn't want. Bubbles can last a long time. What would make you change your perspective? Trump's presidency has to become more broadly accepted. The Europeans and the Democrats are kind of in disbelief. They think he's going to fail. If there is a change and people say, "Hey, these are some really good ideas," I would say, "OK, this can turn into a golden age of the United States." But so far, I'm skeptical. I would like to see this tariff war fizzle out. I would want to see AI start generating meaningful profits to justify the level of capital expenditure. And then the Fed at some point—it needs to cut rates. | 
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