President Donald Trump spoke to Russian President Vladimir Putin on Tuesday.
Drew Angerer/Getty Images
Investors are looking for discounted Russian assets that could jump in value on a Ukraine peace deal.
President Donald Trump has fueled hopes the war might end soon and Russia could rejoin global markets.
Risks include a resumption of the conflict and a reimposition of sanctions.
Investors are quietly searching for beaten-down Russian assets that could surge in value if a peace deal is struck and capital floods back into the country. It won’t be easy money.
Traders have been snapping up shares of foreign-listed Russian companies and bought Kazakhstan’s tenge currency as a ruble proxy, Bloomberg reported. Wall Street banks have been hunting Russian corporate bonds to satisfy demand from Middle Eastern family offices, and pitching their clients on ruble-linked derivative contracts called “non-deliverable forwards” that bypass sanctions, per the outlet.
“There’s an aggressive search for securities of Russian issuers around the world,” Moscow-based investment banker Evgeny Kogan told Bloomberg. “Investors in general are asking how quickly they can enter the Russian market.”
Russia’s invasion of Ukraine in early 2022 sent investors scattering and spurred Western countries to impose sanctions that have choked Russia’s banking sector and wider economy.
US President Donald Trump is working to broker an end to the war and spoke to Russian President Vladimir Putin on Tuesday, but the pair couldn’t reach terms on a cease-fire meaning further negotiations lie ahead.
Rising ruble
Eswar Prasad, a senior professor of trade policy at Cornell University and a senior fellow at the Brookings Institution, told Business Insider: “The prospect of a peace deal and the lifting of sanctions on Russia is likely to result in a wave of financial capital flowing into the country in the hopes of profiting from rebounds of its economy, financial markets, and currency.”
Trump’s confidence that a truce isn’t far away has contributed to the Russian ruble rising more than 20% against the dollar this year. The currency is now the strongest it’s been in more than seven months.
However, a combination of sanctions and internal controls has made it tricky for Western institutional investors to bet on Russia. That has fueled demand for non-deliverable forwards that don’t involve any Russian nationals or physical assets.
“The main ruble trade is in the NDF market but it is largely hedge funds participating in this trade due to the relatively low liquidity,” Roger Mark, a fixed-income analyst at Ninety One, told BI.
“The rationale is clear — potential spot appreciation on the hope of the war ending and a normalization in Russia’s economic relationship with the US/West,” he said.
‘High risk’
Still, Mark cautioned that a cease-fire is far from assured, Trump could still escalate sanctions against Moscow, the ruble has strengthened considerably already, and reopening Russia to the world could lead to capital flowing out instead of in.
“With sanctions risks still meaningful amid an uncertain policy outlook, it remains a high-risk currency for institutional investors to allocate to, especially given its poor liquidity and off-benchmark nature,” Mark said.
Betting on Russian assets also poses legal and reputational risks to investors if they act too soon, and even if Russia and Ukraine lay down arms, there’s no guarantee that conflict won’t flare up again.
“Uncertainty about the durability of any peace deal and the possibility of the reimposition of sanctions in the future could restrain such capital inflows into Russia, once the initial euphoria has passed,” Prasad said.
This growing distrust could have serious consequences, as a fear-driven pullback in spending is one input to an actual downturn. Cynical shoppers may avoid nonessential purchases, businesses could pause hiring, and investors might step back from the market. And, the slower the economy, the weaker it becomes.
“There’s a massive amount of uncertainty that’s really weighing on people,” said Joanne Hsu, who oversees the closely watched University of Michigan Index of Consumer Sentiment, which tanked to its lowest in three years in March. “People are really worried that these policies are going to lead to a resurgence in inflation. We’re seeing a deterioration in views related to the overall economy, which is related to personal finances, inflation, and most critically, labor markets.”
The vibecession is back
The vibecession rears its head whenever Americans are feeling particularly uncertain about the economy. Even if the major economic indicators aren’t alarming on paper, data shows that rapid changes on Wall Street and in the White House make consumers and businesses nervous.
Many consumers are worried about how federal policy will shape the cost of essentials, like groceries and housing. The Consumer Sentiment Index — which is based on surveys and interviews with hundreds of US adults by researchers at the University of Michigan — decreased by 16.1 points between December 2024 and March 2025.That’s the sharpest three-month drop since the pandemic began in 2020.
The Economic Policy Uncertainty Index, similarly, has climbed over 60 points since December, a much higher-than-typical jump. The measure is based on how much major media outlets are writing about economic uncertainty, the frequency of disagreement among economic forecasters, and other factors.
The research firm Civiqs also found that over a quarter of Americans believe the economy is doing “very bad” right now. Google searches for “recession” spiked in the past 30 days.
Among consumers, Trump is losing ground on what has historically been his — and the GOP’s — strongest issue. The majority of Americans disapprove of Trump’s second-term job performance on the economy (54% disapprove) and how he’s handling inflation and cost of living (55% disapprove), per an NBC News poll published March 16. It’s taking a hit to the president’s overall approval rating.
“If people both think the economy is deteriorating and they expect their own incomes to weaken as well, it’s hard to imagine how robust consumer spending can really be under those circumstances,” Hsu said.
Businesses aren’t escaping the vibescession either. Many CEOs and executives are worried about what economic uncertainty means for profits, hiring, and growth.
The Federal Reserve Bank of New York found that general business conditions, new orders and shipments, employment levels, and financial optimism have all declined among businesses across the state in 2025.
“Small businesses have particularly few options and little wiggle room to deal with the sheer size of the tariffs in the pipeline,” Diane Swonk, chief economist at KMPG, told BI in an email. “They both squeeze profits margins and prompt cuts to staff, while boosting prices.”
At the C-Suite level, many companies’ plans for hiring and capital investment, as well as sales projections, have also decreased since Trump’s Inauguration — per a survey of 150 CEOs by Business Roundtable. Business Roundtable CEO Joshua Bolten wrote in the March survey report that the downward trends are due to “several factors, including signs of economic headwinds and an atmosphere of uncertainty in Washington.”
Why Americans feel so bad about the economy
Vibecessions aren’t new. Consumer sentiment similarly dipped during and shortly after the pandemic, and again ahead of the 2024 presidential election. Instability in the stock market, high inflation rates, and losses in the job market often lead to widespread financial anxiety. Still, Americans’ current pessimism toward the economy is notable.
The present vibecession comes in the context of declines in the S&P 500, Dow Jones Industrial Average, and Nasdaq in recent weeks, which have seen some recovery but remain well below their February highs. Trump’s steep — and quickly shifting — tariff policies have also left US businesses and consumers expecting a significant jump in prices for things like food, construction materials, electronics, and alcohol.
Inflation has eased from its post-pandemic highs, but many shoppers already feel like their budgets are stretched thin. The chaos around eggs, for example, has become a symbol of high grocery prices.
The Trump Administration and Department of Government Efficiency have added to that uncertainty with mass firing of federal workers and budget slashing for government programs. Layoffs also hit major companies like Meta, Amazon, Southwest, and others in rapid succession, further fueling the public’s perception of economic turmoil. This comes as the white-collar job market is notoriously difficult to break into, despite overall unemployment rates holding steady.
Hsu told BI that typically consumer sentiment patterns fall along party lines — Democrats feel more economically confident when the president is a Democrat, and Republicans prefer Republican administrations. But, in the past few months, consumer sentiment has significantly declined among Democrats, Republicans, and Independents.
Vibescessions have financial consequences
The US isn’t in a true recession. Economists and financial analysts told BI that economic downturns are measured based on several factors including long-term jobs and consumer spending data. A couple weeks of stock market and policy instability aren’t enough to call a recession.
Still, even if the US economy isn’t doing as badly as Americans imagine, a vibecession changes consumer behavior. People are likely to tighten their spending on nonessentials and delay major purchases, which could disrupt the travel industry and the housing market. Some small businesses and major corporations have also signaled that they will pass the price of Trump’s tariffs onto consumers, which could contribute to shoppers buying less.
“Moral of the story is that when uncertainty spikes, we tend to err on the side of caution and delay big spending decisions,” Swonk said. “We are seeing that base emotion play out in real time in the overall economy.”
Retirees, and hopeful retirees, told BI that they are adjusting their investments in the stock market and 401(k)s to be more conservative. Job seekers may also become less likely to leave their current jobs or see outside promotions, affecting churn in the labor market, Hsu said.
The stock market has shown signs of recovery in the past few days, but America’s latest vibecession isn’t over — and the future is hard to predict.
“We’re in a really unprecedented policy environment,” Hsu said. “With policy changing every day, and every hour in some situations, it’s really hard for consumers to plan in a meaningful way.”
That’s according to top Wall Street forecasters who say they expect a more positive trajectory for stocks after the latest tariff-induced decline.
Concerns surrounding President Donald Trump’s trade war and a potential recession in the US helped wipe away around $5 trillion in market cap in the S&P 500 in recent weeks, taking the benchmark index solidly into correctional territory. Stocks capped off their worst weekly performance in two years last Friday. However, Morgan Stanley and Citi analysts said the market may have found a bottom.
Morgan Stanley analysts said there are five reasons the sell-off is over and stocks should start to recover from here.
First, the bank said major stock averages entered oversold territory last week. The S&P 500 traded close to 5,500 on Thursday, at the low end of the bank’s expected trading range for the index in the first half of 2025.
Second, sentiment and positioning gauges for the benchmark index have started to “lighten up considerably,” a sign more upside is on the way.
Third, seasonal indicators look like they’ve improved going into the second half of the month.
Fourth, the US dollar has weakened in recent weeks, which could spark a wave of positive corporate earnings revisions as companies log stronger sales in overseas markets.
Finally, lower interest rates this year could help boost economic surprise indices in the US, which could also help send stocks higher, the bank said.
“We stand by our call from last week that 5,500 should provide support for a tradable rally led by cyclical, lower quality, and expensive growth stocks that have been hit the hardest and where the short base is the greatest. Friday’s price action seems to support that call,” Morgan Stanley CIO Mike Wilson wrote on Monday.
Citi seems to agree.
Analysts said the latest sell-off has taken the S&P 500 to a healthier valuation. Meanwhile, the Magnificent Seven tech stocks also appear to be more “rationally valued,” the bank said. The group of top tech stocks now accounts for around nine percentage points of the S&P 500’s total return since December 2023, down significantly from last year’s highs.
The S&P 500 is also down 10% from its all-time high in February. The decline is balancing the risk-reward of stocks “to the upside,” analysts said.
“This past week, we drew a line in the sand at 5,500 as a level where the risk-reward begins to skew more favorably,” the bank wrote.
“Longer-term, we remain fundamentally constructive on the S&P 500 setup as productivity improvement, AI promise, operating leverage, shareholder influences, and ongoing business model maturation elements better describe our view of US exceptionalism.”
Citi’s positive outlook is notable given that the bank recently also recalibrated its view of US stocks, downgrading the market to “neutral,” while boosting its view of China equities to “overweight.”
Morgan Stanley and Citi analysts are sticking to year-end price targets of 6,500 for the benchmark index. That implies stocks will gain about 15% by the end of 2025.
The bear case
Some pessimism, though, is still percolating on Wall Street as traders eye the potential for a growth slowdown in the US.
In recent days, Goldman Sachs and RBC have downgraded their price targets for the S&P 500 to 6,200.
While not its base case, Citi said it thinks the S&P 500 could fall as low as 5,100, assuming that policy uncertainty and growth fears continue to weigh on sentiment.
Morgan Stanley, meanwhile, thinks the index could drop as low as 4,600 in the event of a recession, implying an 18% decline from Monday’s levels.
“We also think it’s important for the S&P 500 to respond to the ~5500 level given the fundamental and technical support there. If it doesn’t, that’s a potential sign that growth could be deteriorating faster than expected, and recession risk could be increasing along with the odds of our bear case outcome,” they added.
One thing seems clear: markets shouldn’t expect the Trump administration to swoop in and save stocks anytime soon. The president’s team has repeatedly indicated that they aren’t focused on markets, with Treasury Secretary Scott Bessent noting that he was “not at all” concerned about the recent drop in stocks.
“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy. They’re normal. What’s not healthy is straight up,” Bessent told NBC over the weekend, adding that he believed the market would perform “great” over the long term.
His remarks come a week after Trump refused to rule out a US recession as a result of the administration’s policies.
Investment bankers welcomed 2025 with high hopes that Trump’s business-friendly, antiregulation policies would lead to a surge in fee-generating deals. Instead, many corporate boards and buyout firms are standing on the sidelines as they wait to see the impact Trump’s aggressive trade policies and gutting of federal agencies could have on the economy and stock market.
How bad things are depends on who you ask. Some bankers said corporate dealmaking has merely slowed, while others described Wall Street’s bread-and-butter business of M&A and IPOs in more dire terms. What’s clear is that no one knows when — or whether — the clouds might lift, raising questions about everything from bonuses to layoffs to hiring.
“A common refrain I hear amongst dozens of sponsors over the last six to eight weeks,” said Seth Goldblum, whose firm provides deal advisory services to private equity firms, is that “the uncertainty in and of itself is actually the worst thing.”
“A lot of our sponsors are just sitting on the sideline,” he said, referring to private equity firms, which are often referred to as financial deal sponsors. The managing director for CBIZ Private Equity Services pointed to the negative impact Trump’s tariffs could have on inflation and interest rates as among the issues holding firms back.
“It’s a shame. It looked like we were finally getting unstuck,” Goldblum said, adding that the deals industry now appears “back to being stuck.”
What bankers are saying
Rob Stowe, an equity capital markets banker with Barclays, agreed that 2025 has proved more challenging than many in his field anticipated.
“We are still seeing companies coming to market, and we still expect we’ll see companies coming to market, but it’s definitely making decisions harder, and it’s adding an extra element of caution for corporates and the sponsors that are thinking about raising capital,” said Stowe, who heads the division that handles IPOs for the bank’s Americas region.
Eric Li, who covers investing banking for research firm Crisil Coalition Greenwich, said his discussions with clients suggest a more dire picture.
Dealmaking, he said, has largely “frozen.”
“There aren’t any deals going on,” Li said. “It’s almost as bad as Covid,” he added, referring to the dealmaking stoppage that followed widespread stay-at-home orders in 2020 as the deadly virus spread across the globe.
According to the consulting and advisory firm EY, Wall Street started the year strong. In January, there was a 29% year-over-year increase in mergers and acquisitions in the US, valued at more than $1 billion. The consulting firm’s M&A data has yet to be released for February, however, and that is when the stock market started reacting negatively to Trump’s trade policies, sending the S&P 500 down roughly 10% since a high set on February 19 and about 8% since Trump was sworn in on January 20.
S&P 500 Index performance from November 1, 2024, to March 13, 2025. The market took a nosedive in March as the global economy reacted to Trump administration policies.
Markets Insider/James Faris
Layoffs and hiring
On Wall Street, the big question is what it all means for the bottom line — and how it will impact pay and jobs.
At the end of 2024, investment banks were hiring aggressively as dealmaking heated up in anticipation of a Trump White House. Now, there are questions about whether the momentum will continue.
Brianne Sterling, head of the investment-banking recruiting practice at the financial services search firm Selby Jennings, said hiring hasn’t reached the gangbuster levels some had hoped to see when the year started. She said some clients are still interviewing new hires even if they’ve indicated they’ll push off the timeline for filling open roles till later in the year in hopes of improved market conditions.
Still, she feels optimistic.
“I think we will still see hiring,” she said. “I just don’t think it’ll be as aggressive or as much volume as we initially anticipated, but we’ll see how the year goes.”
Even amid rosier expectations many banks were focused on cutting costs this year, including Goldman Sachs. As Business Insider previously reported, CEO David Solomon has tasked some staffers with finding ways to save money, including by reducing redundancies and moving workers to cheaper locations like Dallas, Texas.
The bank’s vice president ranks have been targeted for cuts because their numbers have gotten bloated. The bank even moved its annual headcount-cutting exercise from fall to spring, when it is set to cut roughly 3% to 5% of its workforce, which stood at 46,500 as of the end of 2024.
Bank of America has also recently cut investment banking roles, including positions in New York, a person familiar with the cuts said. The more recent round of layoffs primarily impacted junior bankers, such as analysts and associates — though some may be reassigned to other roles within the firm, added the person. Earlier this year, the bank also cut more senior positions in a round that amounted to under 1% of the bank’s workforce in global markets and global corporate and investment banking, this person added. The cuts were first reported by Reuters.
Sid Khosla, a financial services executive at EY who serves as the firm’s banking and capital markets leader, told BI that such layoffs are part of what he calls “the efficiency conversation” among companies seeking to please shareholders — a trend that started before Trump took office. The topic has come up increasingly in talks with clients, particularly in the past three to four months, Khosla said. “It’s always the top two or three conversations. Some institutions may think it’s a No. 1 conversation.”
Whether corporate dealmaking picks back up depends on how long the turmoil lasts, bankers said.
“I think any reasonable outlook is going to be a little clouded here for a while because there’s no certainty that the conversations around tariffs and the concerns around the US economy or around interest rates are going to stop,” said Stowe, adding: “I also don’t think there’s any certainty that the current level of volatility will dissipate in the near term.”
Reed Alexander is a correspondent at Business Insider covering Wall Street and financial services. He can be reached via email at ralexander@businessinsider.com, or SMS/the encrypted app Signal at (561) 247-5758.
