When Point72 Asset Management CEO Steve Cohen speaks, investors should listen. The fund manager spoke at the Future Investment Initiative Institute’s summit in Miami last Friday, Feb. 21.
Cohen warned about a second-half-of-the-year economic slowdown in the U.S. He cited tighter immigration policies and the Department of Government Efficiency (“DOGE”) as the two primary negative catalysts.
Cohen thinks the U.S. economic growth will fall from 2.5% to 1.5%. Investors should expect that after the best gains in the last two years, a significant correction is not a surprise.
Treasury yields are reflecting ongoing inflation risks and slowing growth. The 10-year Treasury neared 5.0% (at 4.81%) before closing at 4.43% last week. The yield may soar past 5% if stock market performance worsens.
Cohen characterized DOGE as an austerity initiative. Expect U.S. jobs reports to worsen, as government employment figures decline. Stock markets continue to price in the prospects of weaker consumer demand. Costco (COST), a richly valued retailer at 61 times price-to-earnings, fell after Walmart (WMT) posted Q4 results. Walmart issued a weak outlook for 2025 last week.
After trading near the low for the year, Pepsi (PEP) shares bottomed at around $143 from Jan. to Feb. PEP stock popped higher, as did Coca-Cola (KO). KO stock gained over 15% in the last month.
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