The backdrop should be reassuring for many investors: A lively bull market, pro-business policies promised by the Trump administration and a Federal Reserve close to pulling off a soft landing. However, Wall Street\u2019s biggest names aren\u2019t sounding so bullish for the year ahead.<\/p>\n\n\n\n
Convening at an alternative investments conference in Miami this week, hedge-fund titans and industry pros collectively struck a cautious tone about elevated market valuations and potentially negative impacts from President Donald Trump\u2019s protectionist policies.<\/p>\n\n\n\n
Point72\u2032s Steve Cohen said he believes tariffs and an immigration crackdown will stoke inflationary pressures and hinder consumer spending. The family office head and Mets owner\u2002therefore expects the broader market to get bumpy<\/a>, particularly in the second half of the year.<\/p>\n\n\n\n \u201cI don\u2019t think that\u2019s a great backdrop in 2025,\u201d Cohen said at the iConnections Global Alts conference dubbed Hedge Fund Week. \u201cI would expect the markets to top over the next couple months, if it hasn\u2019t already topped already, and I would expect the second half to be a little tougher.\u201d<\/p>\n\n\n\n The S&P 500<\/a> just scored a second consecutive annual gain above 20%, and the two-year gain of 53% is the best since the nearly 66% rally in 1997 and 1998. The equity benchmark is up 3% year to date, but investors just got a taste of violent volatility this week. An artificial intelligence competitor out of China caused a massive sell-off in Nvidia and other megacap tech names earlier this week.<\/p>\n\n\n\n Karen Karniol-Tambour, Bridgewater\u2019s co-chief investment officer, said she holds a neutral view on the markets right now because of the duality of higher-than-expected growth and hotter-than-expected inflation.<\/p>\n\n\n\n \u201cIt\u2019s not a great time to really lean in and take a ton of risk,\u201d she said. \u201cYou are, on the margin, more likely to get a strong growth and stronger-than-expected inflation environment, but that could change quickly, because with the amount of policy uncertainty you have, it\u2019s not hard to imagine one policy change really tilting us in terms of the macro environment.\u201d<\/p>\n\n\n\n Karniol-Tambour, who helps manage the world\u2019s largest hedge fund, added that the biggest opportunity she sees across public markets right now is rebuilding the fixed-income allocations.<\/p>\n\n\n\n