So far, tariffs haven’t derailed the market rally, but experts warn that could change quickly if trade wars escalate.
Transcript:
CAROLINE WOODS: Not feeling the impact of tariffs yet. this feels reminiscent of a few years ago when we kept hearing calls of a recession and it never actually came. Will we eventually feel the impact of these tariffs?
GEORGE SEAY: I think we will if they’re across the board and they stick around a long time. I feel like this has been such an ad hoc exercise. And the president gives all these draconian issuances about tariffs related to our major trading Partners. And he has brought the hammer down on India, for instance. But he hasn’t on China. And he just extended them for another 90 days. And you look at this and think it’s very ad hoc, and you wonder about the efficacy of singling out one country and not singling out another country. And then we’ve got the Russia talks coming up, and he hasn’t brought the hammer down on Russia like he threatened to do as well. So it seems very arbitrary. But as long as it’s kind of isolated and not across the board in the 20% to 30% range, it may not have as big an impact as people have been anticipating. But if he eventually brings the hammer down on Mexico and some of the largest trading Partners, it will have an impact for sure.
CAROLINE WOODS: Meanwhile, we did see the tariff deadline for China get extended once again. Now I think we’re looking at early November until we might have an update there. Does that change your market view at all? I’m really just trying to get a better sense of if you think this rally is sustainable, or if you think that we’re due for a correction?
GEORGE SEAY: Well, I think we’re due for a correction, but I’ve been wrong for the last month or month and a half on that and trying to gauge the market and when it’s going to correct or whether it’s going to keep going up is a fool’s game. It’s impossible to discern that. I think it’s ripe for a correction, but that doesn’t mean it’s going to happen. The market could rally into the end of the year, as long as we don’t get excessive tariffs or some geopolitical disruption, like Israel bombing Iran’s oil and gas infrastructure like they were held off on by the US back when they were fighting just a month ago. I mean, you think about how quickly all these things change or something dramatic happening in Ukraine and Russia. I don’t see a whole lot of catalytic influences that would take the market heavily up or heavily down. I think we’ll probably just continue to churn up and to the right in a very measured, small way, unless something really disruptive happens. And part of that would probably be in the short term. And this is where it gets really nuanced and difficult to predict. You get economic statistics that show that we’re slowing down dramatically. The market would probably take a short term 5% to 7% hit, but then eventually, the players in the market will come back around to the Fed, probably will cut more aggressively if that happens. And that’s bullish. So in the short term, it’s really hard to trade this a market like this. You kind of want to just have conviction about long term investments that are anywhere from 6 to 3, six months to three or four years and stick with them and add to them if they get weaker.
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