Good morning. Greg McKenna filling in for Sheryl. Last week, I spent a lot of time at the Bloomberg Invest summit listening to business leaders like Carlyle CEO Harvey Schwartz and Blackstone COO Jonathan Gray respond to questions about markets plunging amid President Donald Trump’s on-again, off-again tariff threats, particularly with Mexico and Canada.
The sell-off has continued this week. At Tuesday’s close, the S&P 500 finished down 9.3% from the index’s all-time high in mid-February, while the Nasdaq Composite has fallen 13% in that span. Wall Street considers a 10% drop to be correction territory.
Schwartz and Gray didn’t sound the panic button last week. From their perspective, while tariff uncertainty may raise the risk profile of certain companies, it can also make good businesses available at a discount. Amid the short-term upheaval, they’re ultimately judged on long-term performance.
Still, Soros Fund Management CEO Dawn Fitzpatrick didn’t mince words about the challenges many companies and individuals face. She also acknowledged the argument of Treasury Secretary Scott Bessent, who formerly held her other role of CIO at Soros, that many U.S. manufacturers will be able to absorb price increases from tariffs.
Out of 192 CFOs and finance leaders recently polled by Gartner, 59% said their cost base would absorb little to none of the increased price pressures from tariffs. About 30% said nearly all of those costs would be passed on to consumers, while another 29% said the cost pass-through would be limited to 10% or less.
“But I think what you can't control is consumer confidence and corporate confidence,” Fitzpatrick said at the conference hosted by Bloomberg, “and I think that is what is falling off a cliff right now.”
One big worry is that businesses will decide to delay investment as the saga continues.
“We've not seen this level of tariffs, at least in modern times,” said Raymond J. Maguire, president of investment bank Lazard. “We've seen it historically, the implications of which historically have been pretty dramatic.”
He was likely referencing the Smott-Hawley tariffs of 1930. As Sam Stovall, chief investment strategist at CFRA Research, told me after Monday’s bloodbath for stocks, those measures placed trade barriers around the world and greatly exacerbated the Great Depression.
“Nobody really expects that,” he said. “Certainly nobody wants that, but it’s something that people fear.”
Regardless, investors continue to brace for impact. Goldman Sachs’ chief economist revealed Tuesday the firm had downgraded expectations for American GDP growth in 2025, with the investment bank’s forecast moving below Wall Street’s consensus for the first time in 2½ years.
At the conference last week, Brookfield CEO Bruce Flatt got the last word. Flatt, who leads the world’s second-largest alternative asset manager, was asked what he would tell those in the audience feeling uneasy as the state of the global economy seems to shift by the hour.
“Stay focused on the long ball,” said Flatt, who some have dubbed Canada’s Warren Buffett. “Nothing else matters.”
That might be easier said than done.
Greg McKenna
greg.mckenna@fortune.com
