Economic Downside Risk Increases Due to Tariffs, Says Apollo Global Chief Economist

Impact of Tariffs on Global Economy and Tech Stocks

• 🌍 40% of S&P 500 revenue comes from abroad, with Magnificent Seven tech companies relying on international markets for 50% of their revenue.
• 📉 Tariffs are having a larger impact on global GDP than on the US, creating significant trouble, especially for tech stocks.
• 🚫 The statement that there will be no negotiation on tariffs implies a sustained negative impact on corporate earnings.

Rising Recession Risk and Sentiment Decline

• ⚠️ The risk of recession has absolutely risen in the last 24 hours due to increased tariffs.
• 📉 Both corporate and consumer sentiment have been weakening, with corporates planning less capital expenditure and consumers worried about jobs and future business conditions.
• 📊 Consumers are expressing the worst outlook for business conditions in 40 years.

Jobs Report and Market Scenarios

• 📊 The upcoming jobs report is crucial, with different outcomes leading to varied market interpretations.
• 💡 A good jobs report might be seen as stale information given the recent tariff news, while a bad report could signal the Fed needs to cut rates.
• ⚠️ A mediocre to slightly bad report could be the worst-case scenario for the market.

Layoffs and Economic Outlook

• 🚨 Layoffs are increasing, particularly in the federal government, signaling a potential creep higher in the unemployment rate.
• 📉 Combining increased layoffs, declining stock markets, negative sentiment, and tariff impacts, the economic picture shows more downside risk going forward.