The Trump Sell-Off Isn't a Global Crisis Yet

March 17, 2025

| Sean Michael Cummings

Bulls are flinching across the market...

Major financial institutions are downgrading their expectations for U.S. stocks.

On Tuesday, Goldman Sachs lowered its 2025 price target for the S&P 500 Index. It cited tariffs as a threat to U.S. companies' earnings.

JPMorgan Chase also hedged its bullish outlook for the year. Although the bank has maintained its S&P 500 price target, it warned that the market might not hit that level until 2026.

And Citigroup has backed off U.S. stocks, too. The bank reduced its buy recommendation from "overweight" stocks to "neutral" last Monday.

In short, fear has gripped the hearts of Wall Street analysts today. President Donald Trump's new "trade war" has everyone rethinking their bullish postures. And the S&P 500 can't catch a break as a result... It has been falling since February, and it entered official correction territory last week.

If you've been following the news, you might be nervous too. It might seem like the U.S. is on the cusp of a long, painful bear market – or even a 2008-style recession.

But one ingredient is missing from today's stormy economic outlook... and until it appears, you need to stay bullish.

Let me explain...

In the first 50 days of the Trump presidency, stocks fell 6.4%. It was the market's worst start to a presidency since 2009...

And as you likely remember, 2009 was marked by the financial crisis – one of the worst market events in living memory.

Back then, banks bundled risky "subprime" mortgages into complex financial products, and the toxic debt spread throughout the financial system. As homeowners started defaulting on these mortgages, major institutions were left holding the bag. Panic ensued. And the housing collapse that followed triggered the worst recession since the Great Depression.

The subprime mortgage crisis was a key ingredient to the drawdown – but almost no one saw it coming.

Incidents like this are known as "black swan" events. They're unforeseen economic shocks that only become clear in retrospect.

The nasty surprise was a key reason the crisis got as bad as it did in 2008 and 2009. Without it, the financial crisis would likely have stayed more contained.

This contrasts with the situation today...

Stocks are selling off like it's 2009. And investors are behaving as though a massive wealth-destroying surprise is rocking the global economy...

But that simply isn't the case. We aren't seeing a black-swan event today.

Now, you might be asking... What about the tariffs?

The tariffs are disruptive, yes. But they aren't a surprise like the subprime mortgage crisis was. Trump was elected on a pro-tariff platform. And as I wrote about earlier this month, the White House has been up front about its goals for the U.S. economy. The administration has telegraphed its moves to the public via press conference.

Investors aren't happy. And the policy execution has been chaotic. But it's a far cry from a black-swan event... which means we don't have the key ingredient in place for a dangerous crash.

Today's sell-off is fundamentally under control. These stock headwinds are not surprising... and not globally systemic. It takes a real sucker punch to knock the world economy back on its heels.

In short – don't panic.

Investors are behaving like a new black swan is in the history books. Even prominent bulls are starting to flinch... But you don't have to.

If a shock adds another layer to the economy's fear, then it'll be time to get defensive. But until that happens, you should keep a cool head... and maybe even take this as an opportunity to buy the dip.

Good investing,

Sean Michael Cummings

The Trump Sell-Off Isn't a Global Crisis Yet

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