Donald Trump’s 2024 election sent many finance types into spasms of anticipatory ecstasy as they imagined freedom from regulations, taxes and unfamiliar pronouns.
“We’re stepping into the most pro-growth, pro-business, pro-American administration I’ve perhaps seen in my adult lifetime,” gushed the hedge fund manager Bill Ackman in December.
One Wall Street veteran, however, understood the risk an unleashed Trump posed to the economy. After Trump’s victory in November, Peter Berezin, chief global strategist at BCA Research, which provides macroeconomic research to major financial institutions, estimated that the chance of a recession had climbed to 75%. “The prospect of an escalation of the trade war is likely to depress corporate investment while lowering real household disposable income,” said a BCA report.
The surprising thing isn’t that Berezin saw the Trump tariff crisis coming, but that so many of his peers didn’t. You don’t have to be a sophisticated financial professional to understand that Trump believes, firmly and ardently, in taxing imports, and he thinks any country that sells more goods to America than it buys must be ripping us off. Yet Berezin was an outlier.
On Monday, as stocks whipsawed on shifting news and rumors about the tariffs, I spoke to Berezin, who is based in Montreal, about how Wall Street had gotten Trump so wrong. He told me that many investors who pride themselves on their savvy are in fact just creatures of the herd. “All these cognitive biases that amateur retail investors are subject to, the Wall Street pros, are, if anything, even more subject to them because they’ve got career risk associated with bucking the trend,” he said.