A local financial adviser pegs the risk of global recession at between 30 and 40 per cent, after Donald Trump’s announcement of sweeping global tariffs sent the US stock market in a tail spin.

The prediction from Bryan Dooley, the chief investment officer for LOM Asset Management Ltd, may be conservative.

Goldman Sachs raised the odds of a US recession to 45 per cent, their second hike in a week. Others are at 50 per cent.

JP Morgan chief economist Bruce Kasman, has raised the risk of a global recession from 40 per cent to 60 per cent.

“Equity markets do not like uncertainty,” said Mr Dooley, a regular columnist on the markets for The Royal Gazette.

“Now, there is more uncertainty, because we do not know which part of the tariffs are going to stick. The more tariffs that stick, the more downward pressure there will be on the economy and on earnings. That has already had an impact on the stock market.”

After Mr Trump launched his tariffs on Wednesday, the Dow Jones Industrial Average fell more than 1,700 points. The Nasdaq and the S&P 500 also experienced record drops, while stocks such as Apple lost about 20 per cent of their value.

Billionaire Bill Ackman, a Trump ally, has reportedly begged the US president to stop the reciprocal tariffs, warning of an “economic nuclear winter”.

Mr Dooley said such statements were “a little dramatic”, but said if we do not have an outright recession we could see a year of no growth.

He was particularly concerned by the Chicago Board Options Exchange Volatility Index.

The Vix measures market volatility and is sometimes called the 'fear gauge'.

It reflects the market's expectation of volatility over the next 30 days. Higher Vix values signal increased uncertainty and potential for market downturns, while lower values suggest more stability. It is a real-time snapshot of investor sentiment and market stress.

The Index stands at 45.

“That is a big number,” Mr Dooley said. “In normal times it stands between 15 and 20. You have to go back to the early days of the Covid-19 pandemic to find as much volatility as we have had recently. That was something we could not control. This is entirely man-made.”

He predicted the falling stock market will hit pensions including those in Bermuda.

“It would be hard to find a pension fund that does not have exposure to equity,” Mr Dooley said. “Everyone has some kind of risk exposure. Pensions are long-term money.”

He said most good pension advisers will be talking their clients through the crisis, right now, so that no one panics and sells out.

“The main impact on Bermuda will be price increases,” Mr Dooley said. “Tariffs raise costs.”

In his own office, his clients are staying calm. Most of his firm’s accounts are half stock and half bonds.

“The bond market has actually been flying for the last three days,” he said. “Bonds are perceived as less volatile.”

He called the message in Trump’s tariffs, “brash” and “in your face”.

“China has just hit the US with 34 per cent tariffs,” he said. “You have got a full-on trade war between the two largest economies in the world. That is why the market was actually down more on Friday than it was on Thursday.”

The silver lining to this crisis is that, for some people, it is a good time to buy stocks.

“It all comes down to your time horizon,” Mr Dooley said. “If you want to make money in the next two months, then maybe this is not a good time to buy.

“However, if you have a five-year time horizon, or even a two or three-year horizon, you will probably make out all right. However, no one knows what is going to happen from week to week.”