While many Wall Street strategists are optimistic about further market gains in 2025, Peter Berezin, chief global strategist at BCA Research, remains one of the few dissenting voices.
He believes the US economy may already be in a recession, a view that puts him at odds with mainstream forecasts.
Berezin’s year-end target for the S&P 500 is just 4,450—far below the consensus average of 6,500 and Oppenheimer’s most bullish target of 7,100.
His bearish outlook stems from concerns about economic contraction and weakening corporate earnings, which he believes will make equities a tough investment in the near term.
In an interview with MarketWatch, Berezin said his worst-case scenario envisions the S&P 500 falling to 4,200, driven by two key factors: a decline in forward earnings multiples from around 21 to 17 and a 10% drop in corporate earnings estimates.
“Given that earnings are expected to grow by over 10% over the next 12 months, that would just leave earnings sort of flat from here,” Berezin said.
“I think that driver will be a recession,” he said.
Earnings and the economy are highly correlated, so it’s kind of hard to see one happening without the other.
Berezin estimates there is a 50-50 chance the US is already in a recession, with March potentially marking its official start.
Trade disruptions accelerate economic downturn
A major factor in Berezin’s recession concerns is trade policy.
Following the US election, BCA Research increased its recession probability estimates, anticipating that Trump’s return would lead to trade disruptions.
While many analysts believed Trump’s tariff threats were merely a negotiating tactic, Berezin argues that the former president is a “protectionist at heart” and needs the money because of the sizeable budget deficit.
However, the speed of new tariff measures has surprised even Berezin.
I have to say I didn’t think it would happen that quickly, I didn’t think we would be at 25% tariffs on Canada and Mexico by early March…things have actually soured even more quickly than anticipated.
He warns that these trade policies could weigh heavily on corporate earnings and consumer sentiment, further reinforcing recessionary pressures.
Stocks to avoid and where to find shelter
Berezin acknowledges that he turned negative on stocks in mid-2024—too early, in hindsight—but maintains that now is the time for investors to step back from equities.
“I think you should largely step away from stocks. I mean, if you need to be invested, then by all means, move your portfolio toward the more defensive sectors, such as consumer staples, healthcare, utilities, maybe to some extent,” he said
These sectors tend to be more resilient during economic downturns, offering stability when growth stocks struggle.
He remains bearish on high-risk sectors, including technology, consumer discretionary, industrials, materials, and financials—despite the latter’s strong performance this year.
High-yield credit and cryptocurrencies also remain unattractive in his view.
Instead, Berezin suggests shifting capital to safer assets.
“So you want to own more bonds. You want to own more cash. You want to own more gold. If you can do currency trades, you want to own the very safe, defensive currencies, such as the Japanese yen, the Swiss franc. So there are places to hide, you’re not going to make a lot of money there, but you certainly will potentially avoid losing a lot of money,” he said.
For investors with a 10-year horizon, he acknowledges the challenge of positioning in such an uncertain environment.
While international and value stocks may appear attractive, he warns that these market segments tend to underperform during recessions.
Those reluctant to sell their holdings could consider hedging their portfolios with protective put options.
What could change the outlook?
Despite his bearish stance, Berezin notes that a significant shift in trade policy could alter his outlook.
Berezin said a complete pivot by Trump away from his tariff agenda, though stocks would also have to “go down quite a lot” for that to happen.
For now, Berezin remains one of the few voices urging caution, advising investors to brace for turbulence as economic uncertainty grows.
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