Mumbai: Jefferies' global equity strategist Chris Wood said the base case risk of a 'waterfall' decline in the US stock market is rising in the wake of the new tariff regime in the US.
"The risk is not just high valuations but a panic unwind of passive investment where everybody owns the same stocks," said Wood in his weekly newsletter, Greed & Fear.
He said April 2-when Donald Trump announced the imposition of tariffs on imports into the US-is an 'impoverishment' day, not a 'liberation' day, as termed by President Trump. On Thursday, Wall Street posted its worst day since 2020 in response to the announcement of worldwide tariffs the previous night.
"Tariff hikes are plain bad news as the historic precedent of the Smoot-Hawley Tariff Act of 1930 highlights," said Wood. "It is also very significant that the US dollar is weakening, which is the opposite of what the likes of Stephen Miran, chairman of the Council of Economic Advisers, would have expected."
Wood said Elon Musk leaving the US government in late May is a 'negative'.
"It is becoming ever more apparent that the second Trump administration is missing a person on the economy to curb some of Donald Trump's more extreme instincts, most particularly when they are driven by the notion that trade is a zero-sum game," he said. "This was the role extremely well played by former Treasury Secretary Steven Mnuchin in the first Trump administration. Unfortunately, there appears to be a vacuum in this administration."
"The risk is not just high valuations but a panic unwind of passive investment where everybody owns the same stocks," said Wood in his weekly newsletter, Greed & Fear.
He said April 2-when Donald Trump announced the imposition of tariffs on imports into the US-is an 'impoverishment' day, not a 'liberation' day, as termed by President Trump. On Thursday, Wall Street posted its worst day since 2020 in response to the announcement of worldwide tariffs the previous night.
"Tariff hikes are plain bad news as the historic precedent of the Smoot-Hawley Tariff Act of 1930 highlights," said Wood. "It is also very significant that the US dollar is weakening, which is the opposite of what the likes of Stephen Miran, chairman of the Council of Economic Advisers, would have expected."
Wood said Elon Musk leaving the US government in late May is a 'negative'.
"It is becoming ever more apparent that the second Trump administration is missing a person on the economy to curb some of Donald Trump's more extreme instincts, most particularly when they are driven by the notion that trade is a zero-sum game," he said. "This was the role extremely well played by former Treasury Secretary Steven Mnuchin in the first Trump administration. Unfortunately, there appears to be a vacuum in this administration."
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