MW Buy the S&P 500 when it drops below this level, says Wall Street's biggest bear

By Barbara Kollmeyer

Peter Berezin says he's not yet ready to upgrade stocks

Wall Street's biggest bear says the S&P 500 will need to drop below 4,200 before he'd recommend overweighting stocks.

BCA Research's chief global strategist, Peter Berezin, is looking like one of the most prescient analysts on Wall Street after the worst selloff for stocks since 2020, fueled by President Donald Trump's global tariff plans.

Heading into 2025, Berezin had forecast a 4,450 year-end finish for the S&P 500, versus the Wall Street average of 6,500 as he stressed the likelihood of a looming recession. Concerns over a deteriorating economy in the wake of the market selloff have pushed some on Wall Street to lower their year-end index forecasts recently.

Berezin told clients in a note released early Monday that he is sticking to his year-end S&P 500 target, "since recent events have unfolded broadly in line with my expectations."

He told MarketWatch in an interview in early March that his forecast included two assumptions: S&P 500 forward earnings multiples dropping to 17, from around 21, and earnings estimates falling 10%. And the driver for that would be a recession, he said, forecasting at the time a 50-50 chance of recession. Investors will get the first indications of how companies are feeling when banks kick off earnings season on Friday.

"That said, I firmly believe that no matter how bad the news, there is a price at which you want to be a buyer. This time is no different," Berezin told clients on Monday. He sees the neutral range for the S&P 500 within 250 points, plus or minus range of his 4,450 target - meaning anything between 4,200 and 4,700 would justify a benchmark exposure to equities.

"A drop below 4,200 would justify an overweight to stocks," he said.

"Right now, a lot hinges on whether President Trump keeps in place the tariffs he announced on Liberation Day, which at this point might as well be referred to as Demolition Day," said the Montreal-based strategist.

The good news, he says, is that the U.S. private sector isn't facing the big structural imbalances seen in 2008 that would take years to undo. Rather the current selloff was policy-induced and can be fixed by a policy switch.

White House officials indicated on Sunday they would stay the course, and Trump himself said while he couldn't say what would happen with markets, "the country is much stronger."

Read: The tariffs that led to the biggest stock-market drop since COVID may have been the result of an error

Berezin said it's tough to see "how Trump can change direction while saving face. Most rich developed economies do not charge exorbitant tariffs on U.S. exports, and thus, there is little that they can offer him," he said.

The strategist said there's also an increasing risk that even if Trump backs down, "the U.S. and much of the global economy have already passed the proverbial event horizon - the point where a recession becomes inevitable no matter what happens."

While March U.S. payrolls were strong, Berezin said that indicator tends to lag, and offered a chart showing job growth tends to continue until a recession starts. He's concerned about drops in consumer confidence for February and March predicating another April drop after last week's trade shock.

And that confidence has been historically well linked to consumer spending, which makes up 70% of GDP, he said. "Capex intentions have also given back all their postelection surge and have now returned to levels consistent with very little growth in capital spending," he said.

Read: Trump's tariffs brought carnage to U.S. stocks. What it will take to stop it.

-Barbara Kollmeyer

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April 07, 2025 06:15 ET (10:15 GMT)

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