Investor Gary Black, the managing partner at the Future Fund LLC, has cautioned about impending “lasting damage to the economy” as consumers and businesses are expected to curtail spending ahead of the upcoming earnings season.
What Happened: Black’s comments, made in response to CNBC’s Scott Wapner, highlight concerns stemming from recent bond market volatility and the proposed tariff increases, despite a temporary 90-day pause announced by the Trump administration.
Black drew parallels between the current bond market chaos and the initial stages of the 2020 pandemic, emphasizing the significant tightening of financial conditions resulting from the tariff proposals.
While acknowledging the administration’s temporary reversal and setting a 10% tariff cap for most trading partners, excluding China, Black believes the uncertainty has already triggered a pullback in economic activity.
“CEOs are about to tell us as earnings begin there is now likely lasting damage to the economy (C+I+G+X-M) as consumers and businesses cut back on spending,” Black said in a X post.
He argued that the market’s current signals clearly indicate this anticipated reduction in consumption, investment, government spending, and net exports. This will likely affect the capital expenditure capabilities of the businesses and spending cuts by consumers, according to him
Why It Matters: Black’s analysis contrasts with the administration’s stated goal of lower 10-year Treasury yields, a point raised by Wapner. Wapner noted the irony of the administration’s own policy decisions roiling the bond market and driving rates higher.
This comes despite Treasury Secretary Scott Bessent‘s focus on lower yields and Commerce Secretary Howard Lutnick’s extensive background in the bond market.
Black’s warning suggests that the initial shock of the proposed tariffs, despite a pause, may have already set in motion changes that will manifest in upcoming earnings reports, leading to a slowdown in economic growth.
Price Action: After Thursday’s fall, the Nasdaq 100 index was 17.46% lower than its previous high of 22,222.61 points. The S&P 500 index was down 14.31% from its record of 6,147.43 points and the Dow Jones declined 12.16% from its 52-week high of 45,073.63 points.
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