• 2 hours Airbnb In Acquisition Mode Ahead Of IPO
  • 5 hours Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 7 hours Champagne Sales Slow As European Economic Worries Grow Louder
  • 23 hours Putin Signs “Digital Iron Curtain” Into Law
  • 1 day Russian Metals Magnate Sues U.S. Over Sanctions
  • 1 day Tesla Looks To Jump Into Indian Market
  • 1 day Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 2 days Homeowners Experiment With Risky New Investment Trend
  • 2 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 2 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 2 days Ford CEO Gets Raise After Massive Layoff Round
  • 3 days Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 3 days Where To Look As Gold Miners Inch Higher
  • 4 days Google Faces Billions In Fines From European Regulators
  • 4 days The Energy Industry Has A Millennial Problem
  • 5 days Russian Banks Scramble For Sanction Loopholes
  • 5 days Gold ETFs Take A Hit After Four-Month Run
  • 6 days European Union Takes Aim At Ten New Tax Havens
  • 6 days Goldman Defends Trillion-Dollar Corporate Buyback Spree
  • 6 days $600 Billion At Risk As Boeing Fallout Continues
Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

  1. Home
  2. Markets
  3. Other

Wall Street Expects More Bad News For Stocks

WS

Allies or not, no one will be exempt from Trump’s tariffs, and Europe’s threats of retaliation have only resulted in a counter-move by the U.S. president, while even the market’s diehard bulls are stepping out of stocks.

By close on Friday, the Dow had plunged 1,100 points in three days, this week looks set to sustain losses.

On Sunday, White House officials made it clear that no country will be exempt from the proposed 25-percent tariff on steel imports to the U.S. and the 10-percent tariff on aluminum imports—not even America’s biggest allies, Canada and the United Kingdom.

While the specter of rising interest rates and inflation and recent comments by new Fed chairman Jerome Powell hit the market hard, U.S. protectionist policies are emerging as the final nail in the Dow coffin, signaling, for many, a definitive end to the nine-year bull run.

And a full-blown trade war is coming closer to reality:

Taking to Twitter on Saturday from his Florida-based Mar-a-Lago resort, Trump took trade war rhetoric to the next level in response to Europe’s vow of retaliation.

“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!” Trump tweeted.

The viral back-and-forth prompted long-time Wall Street bull Jeffrey Saut, chief investment strategist of Raymond James, to say that the sidelines are the safest place to be.

Saut is waiting for clarity, and while he’s tamed the bull, he’s not ready to embrace the bear just yet.

Related: 44% Of Americans Affected By Equifax Data Breach

"If this spills over into a full-blown trading war, then I have no idea where the bottom is going to be in this," Saut told CNBC's Trading Nation on Friday. "I'm just kind of sitting on my hands right here until the dust clears."

Still, Saut says that economic and earnings growth strength could mean a fundamentally strong picture for stocks, coupled with bullish under-investment.

"I do think it's noise in the short run. I think it's going to present a buying opportunity in the long run," the investment strategist said.

Would he buy stocks now, though—definitely not. "I am not going to step in here and buy a falling knife," Saut said.

Are there any bulls left out there?

Probably—if only because there may still be a faint light visible at the end of the trade war tunnel.

After all, Ronald Reagan went down a similar protectionist path, and the market didn’t have a meltdown.

And there is hope, still, that the tariffs won’t be imposed.

But the anti-tariff camp is big, and growing, to include Trump’s Republican allies.

Federal Reserve Bank of New York President William Dudley warned last month that the protectionist tariffs would be a dangerous dead end because “trade has played a key role in nearly all of the high-growth success stories since the middle of the last century”. 

“While the gains from a liberalized trade regime are not guaranteed, the alternative of trying to achieve a high standard of living by following a policy of economic isolationism will fail,” Dudley was quoted as saying

By Fred Dunkley for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment