U.S. stock futures slip lower; Cook’s firing increases Fed independence worries
Investing.com -- Despite signs of a more moderate tone on trade and interest rates, macro strategist Simon Flint, writing for Bloomberg, said that he remains downbeat on the S&P 500.
Flint pointed to five key reasons: fragile policy dynamics, weak policy support, deteriorating data, overvalued equities, and stretched investor positioning.
“Softer rhetoric on trade and the Fed is a step in the right direction — but the risk of backsliding is high,” Flint wrote.
He warned that policy volatility, fueled by President Trump’s "long love affair with tariffs" and a roster of "hawkish or unconventional advisers," remains a major headwind.
While the administration may seek to reframe recent tariff moves as strategic, Flint argued that "the prospect of a steady, sensible shift in policy seems precarious."
On the macro front, Flint sees limited support from either fiscal or monetary authorities. “The Fed… is unlikely to cut rates soon — and any premature rate cut under perceived political pressure risks damaging credibility,” he wrote.
Meanwhile, he believes promised reforms around taxes and deregulation may not arrive until fall, and budget constraints limit the scope for meaningful stimulus.
Economic data could worsen rapidly, Flint warned. “Goldman Sachs’ current activity index already shows soft data 1.4 standard deviations below the average,” with hard data tending to historically “‘catch down’ — and fast,” often within two months of a shock.
Valuations also remain a concern. Flint noted that the S&P 500’s price-to-earnings ratio is “one standard deviation above its 10-year average,” while a fair-value estimate suggests the index could fall toward 4,500.
Lastly, global portfolios remain “heavily overweight U.S. assets,” Flint wrote, calling it a “hair-trigger setup should sentiment sour.”
In short, Flint sees little to justify optimism. “America tends to self-correct,” he acknowledged — but not yet.