- Title: Analysts' gloomy predictions of Trump's first 100 days
- Date: 20th January 2017
- Summary: LONDON, ENGLAND, UK (JANUARY 18, 2017) (REUTERS) (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "Well, I think China is the key word here. I think there is the trade tariffs, 45 percent trade tariffs, are potentially being introduced. I think accusations of currency manipulation and what will be the retaliation from the Chinese authorities. I think that will dominate the first 100 days." LONDON, ENGLAND, UK (JANUARY 20, 2017) (REUTERS) (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "The issue over the trade war is I suspect more than talk. But I have to say, some of the issues they're focusing on are the wrong elements. In many ways this is 20-year-old discussion about cheap steel, and blaming China for low-cost manufacturing. China doesn't want low-cost manufacturing. China's trying to go further up the scale, not down the scale. So this is really a bit of an old argument overall. However, is there is a trade war that will certainly cause issues and therefore, will impact certainly on the US economy and China more specifically? What impact on the dollar for that one? Well that's bad for trade, now therefore I suspect that'll be bad for the dollar as well." LONDON, ENGLAND, UK (JANUARY 19, 2017) (REUTERS) (SOUNDBITE) (English) MICHAEL HEWSON, MARKET ANALYST, CMC MARKETS, SAYING: "He has proven already to be a bit of a loose cannon when it comes to his Twitter account and aiming pot-shots at various sectors within the global economy. We're already seeing some of the effects of that with respect to the share prices in the pharmaceuticals sector, in the car sector, and obviously as well as in the defence sector with these recent comments about Lockheed and the F35 fighter jet. So I think we're going to get more of the same. I think the big question is whether the Republican Party are able to keep him in check in terms of some of his, what I would call, 'out-there' policies." LONDON, ENGLAND, UK (JANUARY 18, 2017) (REUTERS) SOUNDBITE (English) JEREMY BATSTONE CARR, INDEPENDENT MARKET ANALYST, SAYING: "You've got opposition from Senate Democrats, you've got opposition from Tea Party Republicans as well. So that expectation, widespread, particularly in many parts of the United States, that Trump is going to be their salvation because of substantial spending may prove in reality to be rather harder to achieve than perhaps previously been thought to be the case." LONDON, ENGLAND, UK (JANUARY 20, 2017) (REUTERS) (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "The markets have been, I think the phrase that's been used is in animal spirits. And that's certainly been coming up ever since we've had the election. Why? Well because the statements he's been saying about more money coming in, about greater freedom to actually be able to spend more, more on the infrastructure, and so the markets have taken that enthusiasm. That's pulled in more investors and so you are getting that level of enthusiasm. Now, unless he can deliver on that with true policies, not only does that froth get blown away, but actually some of those gains will actually reduce quite quickly as well." LONDON, ENGLAND, UK (JANUARY 16, 2017) (REUTERS) (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "If we were to see say US 10-year rates move up decisively towards the 3 percent level, then that has the potential for having quite disruptive effects on markets, on the global rate environment, and of course the ECB would at that stage perhaps be forced to respond to that. Which perhaps explains why they weren't comfortable in extending the QE programme beyond the end of this year." LONDON, ENGLAND, UK (JANUARY 20, 2017) (REUTERS) (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "I'm reasonably optimistic that equities can make further progress from current levels and I would expect the S&P 500, as a proxy for the US equity market, to reach 2400-2500 points during the course of the year. For sure, we may have periodic downturns, panic attacks, from which we can have further progress. But until we see real signs that the US economy is heading for recession, I think this bull market has further to go."
- Embargoed: 3rd February 2017 15:39
- Keywords: Trump 100 president market US China trade war
- Location: LONDON, ENGLAND, UK
- City: LONDON, ENGLAND, UK
- Country: United Kingdom
- Topics: Economic Events
- Reuters ID: LVA0015ZVYC25
- Aspect Ratio: 16:9
- Story Text:Analysts have offered a gloomy prediction of Donald Trump's first 100 days in office, suggesting a trade war with china is a real possibility should the new US President follow through with his threat of imposing new tariffs on Chinese goods.
"Well, I think China is the key word here. I think there is the trade tariffs, 45 percent trade tariffs, are potentially being introduced. I think accusations of currency manipulation and what will be the retaliation from the Chinese authorities. I think that will dominate the first 100 days", said Simon French, Chief Economist at Panmure Gordon.
"The issue over the trade war is I suspect more than talk. But I have to say, some of the issues they're focusing on are the wrong elements. In many ways this is 20-year-old discussion about cheap steel, and blaming China for low-cost manufacturing. China doesn't want low-cost manufacturing. China's trying to go further up the scale, not down the scale. So this is really a bit of an old argument overall. However, is there is a trade war, that will certainly cause issues and therefore, will impact certainly on the US economy and China more specifically. What impact on the dollar for that one? Well that's bad for trade, now therefore I suspect that'll be bad for the dollar as well", said Justin Urquhart Stewart, Head of Corporate Development at Seven Investment Management.
Others fear markets will struggle to deal with the new President's unpredictable use of social media.
"He has proven already to be a bit of a loose cannon when it comes to his Twitter account and aiming pot-shots at various sectors within the global economy. We're already seeing some of the effects of that with respect to the share prices in the pharmaceuticals sector, in the car sector, and obviously as well as in the defence sector with these recent comments about Lockheed and the F35 fighter jet. So I think we're going to get more of the same. I think the big question is whether the Republican Party are able to keep him in check in terms of some of his, what I would call, 'out-there' policies", said Michael Hewson, a Market Analyst at CMC Markets.
An ambitious agenda of lower taxes, more government spending and looser regulations prompted a rally in risky assets following Trump's election.
Some are warning that could start to unravel should he fail to deliver.
"You've got opposition from Senate Democrats, you've got opposition from Tea Party Republicans as well. So that expectation, widespread, particularly in many parts of the United States, that Trump is going to be their salvation because of substantial spending may prove in reality to be rather harder to achieve than perhaps previously been thought to be the case", said independent market analyst Jeremy Batstone Carr.
Conversely, a ramp up in spending could prompt the Fed to follow through with a succession of rate hikes that in turn may pressure the global rate environment.
"If we were to see say US 10-year rates move up decisively towards the 3 percent level, then that has the potential for having quite disruptive effects on markets, on the global rate environment, and of course the ECB would at that stage perhaps be forced to respond to that. which perhaps explains why they weren't comfortable in extending the QE programme beyond the end of this year", said Mike Ingram, Market Strategist at BGC Partners.
But others believe markets are more robust.
"I'm reasonably optimistic that equities can make further progress from current levels and I would expect the S&P 500, as a proxy for the US equity market, to reach 2400-2500 points during the course of the year. For sure, we may have periodic downturns, panic attacks, from which we can have further progress. But until we see real signs that the US economy is heading for recession, I think this bull market has further to go", said CCLA's Chief Investment Officer James Bevan. - Copyright Holder: REUTERS
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