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  • Trump Tariff Threats Have to Be Viewed as Credible: Citi's Kaiser

Trump Tariff Threats Have to Be Viewed as Credible: Citi's Kaiser

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Bloomberg Nov 26, 2024 23:47 · 13.3k Views

Stuart Kaiser, head of equity trading strategy at Citi, discusses the potential market impact of President-elect Donald Trump vowing additional tariffs on Mexico, Canada and China.

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Transcript

  • 00:00 Stewart Kaiser of City right in the following the focus of markets has been Trump policy and geopolitical events that have shifted risk specific pricing, but not reach critical mass to drive broad based de risking.
  • 00:12 Stewart joins us now for more.
  • 00:13 Stewart, good morning, good morning.
  • 00:14 You see evidence of that again this morning.
  • 00:16 Well, I mean, this is what we'll see how futures react, you know, to the tariff announcements.
  • 00:20 The market's kind of been on top of this.
  • 00:21 If you look where volatility markets have been pricing risk premiums, It's been in precious metals, it's been in, you know, China exposed equities and it's been in the currencies.
  • 00:28 So I think the market is kind
  • 00:30 of viewed those as as key sort of pockets of risk and you know, they're going to be surprised I think by the magnitude of Tyrus proposed on what what were former NAFTA, you know, kind of got a trade member.
  • 00:40 So
  • 00:40 without a doubt, you know, we'll see how the futures react.
  • 00:43 But,
  • 00:43 you know, this is this is what we're in for, I think for the next couple of months.
  • 00:47 How credible do you think the threat is?
  • 00:48 Additional 10% on China, 25% on Mexico and Canada.
  • 00:52 How credible is that?
  • 00:53 I mean, you have to read it as credible.
  • 00:54 I mean, this is the president of the United States increased tariffs in his, in his first,
  • 00:58 you know, his first term.
  • 00:59 And this was, you know, part of his his campaign.
  • 01:01 So I think you have to view them as credible.
  • 01:03 You know, I think some of his,
  • 01:05 some of his inner circle has talked about these being negotiating tactics.
  • 01:08 And I think that's that's potentially true.
  • 01:10 But I mean, a negotiating tactic is only effective if you're willing to use it.
  • 01:13 So I think you have to have to view them as as credible threats.
  • 01:16 Yeah, which is the reason why headline risk is real and the reason why you're seeing people trade on this, even if that trade gets faded
  • 01:22 in a couple of hours because of another headline that comes out.
  • 01:25 Is this a good time or a bad time to be a trader?
  • 01:28 Yeah, it's, it's a hard time to be a trader.
  • 01:29 I would say.
  • 01:30 Look, I think it's, it's a good time in the sense that, you know, good traders like a little bit of market volatility.
  • 01:34 I I think the hard part about these type of things is just the unpredictability of it.
  • 01:37 It's not, you know, payrolls are going to be released at 8:30 AM on December 6th and I can kind of position and trade around that.
  • 01:43 You know, this is a little more,
  • 01:45 you know, kind of random
  • 01:46 in, in terms of timing and also, you know, coming to you from a lot of directions, right.
  • 01:50 You have traders that are trying to deal with potential impact on healthcare policy, potential impact on food policy, potential impact on tariffs, etcetera, etcetera.
  • 01:57 I mean, nobody can say this is totally surprising.
  • 01:59 Again, these were all things that were discussed during the election as priorities to deal with.
  • 02:04 But no, it's, it's, it's a difficult time, I think to, to be a trader
  • 02:07 unless you get it right.