Why Did Wall Street Get Trump So Wrong?

Donald Trump’s 2024 election sent many finance types into spasms of anticipatory ecstasy as they imagined freedom from regulations, taxes and unfamiliar pronouns. “Bankers and financiers say Trump’s victory has emboldened those who chafed at ‘woke doctrine’ and felt they had to self-censor or change their language to avoid offending younger colleagues, women, minorities or disabled people,” The Financial Times reported a few days before Trump’s inauguration. It quoted one leading banker crowing — anonymously — about finally being able to use slurs like “retard” again.

The vibes had shifted; the animal spirits were loose. “We’re stepping into the most pro-growth, pro-business, pro-American administration I’ve perhaps seen in my adult lifetime,” gushed the hedge fund manager Bill Ackman in December. One Wall Street veteran, however, understood the risk an unleashed Trump posed to the economy.



After Trump’s victory in November, Peter Berezin, chief global strategist at BCA Research, which provides macroeconomic research to major financial institutions, estimated that the chance of a recession had climbed to 75 percent. “The prospect of an escalation of the trade war is likely to depress corporate investment while lowering real household disposable income,” said a BCA report. The surprising thing isn’t that Berezin saw the Trump tariff crisis coming, but that so many of his peers didn’t.

You don’t have to be a sophisticated financial professional, after all, to understand that Trump believes, firmly and ardently, in taxing imports, and he thinks any country that sells more goods to America than it buys must be ripping us off. All you had to do was read the news or listen to Trump’s own words. Yet Berezin was an outlier; most of the people who make a living off their financial acumen had less understanding of Trump’s priorities than a casual viewer of MSNBC.

On Monday, as stocks whipsawed on shifting news and rumors about the tariffs, I spoke to Berezin, who is based in Montreal, about how Wall Street had gotten Trump so wrong. He told me that many investors who pride themselves on their savvy are in fact just creatures of the herd. “All these cognitive biases that amateur retail investors are subject to, the Wall Street pros, are, if anything, even more subject to them because they’ve got career risk associated with bucking the trend,” he said.

People in finance, said Berezin, are more likely to be punished for being too cautious and pessimistic than for being too hopeful and aggressive. Last year, for instance, a famed strategist named Marko Kolanovic left JPMorgan Chase abruptly when his gloomy predictions about 2023 and 2024 turned out to be wrong, or least . Mike Wilson, also known for his bearishness, stepped down from his post as chair of Morgan Stanley’s Global Investment Committee, though he stayed with the company.

“You don’t get fired for being bullish, but you do get fired for being bearish on Wall Street,” said Berezin. We are having trouble retrieving the article content. Please enable JavaScript in your browser settings.

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