LIVE MARKETS-Don’t buy the Wall Street dip - Citi
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DON'T BUY THE WALL STREET DIP - CITI
For anyone tempted to call peak trade war angst and buy into U.S. stocks, Citi’s head of U.S. equity trading strategy Stuart Kaiser has a few warnings.
In a note to clients, Kaiser calls the S&P 500’s dismal patch “an unpleasant preview of tariff and consumer risks ahead.”
He also reckons Donald Trump’s so-called Liberation Day tariff announcements on April 2 are unlikely to liberate investors from their struggle to predict the economic impacts of a future trade war.
Options markets, Kaiser notes, are not displaying much of a kink around April 2, which is what would happen if traders expected Liberation Day to drive big market swings.
Instead, the volatility curve is more focused on April 4, when non-farm payrolls data might set the tone for sustained anxiety about the U.S. labour market and consumer spending.
All this, Kaiser writes, makes it hard to forecast when the U.S. equity selloff will end.
In his words:
“Tariffs are hugely important, but we aren't convinced they will be "resolved" this week. The pattern of negative headlines, delayed deadlines and better-than-feared implementation seems likely to continue. If so, then tariffs could become a repeated sell-the-rumor, buy-the-fact event.”
“Both growth and policy risk axes will be tested this week. We view 4-Apr payrolls as more important than the 2-Apr tariff deadline, but both are significant. Payrolls are where the rubber meets the road for consumer confidence and spending.”
“The triggers for this sell-off are still in place: risks around the US consumer and unpredictable tariff news remain the norm. Earnings season and congressional budget and tax negotiations also loom. All things considered, we think better entry points are ahead and the risk/reward for buying the dip remains poor.”
(Naomi Rovnick)
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FOR MONDAY'S OTHER LIVE MARKETS POSTS:
TRUMP THREAT ON RUSSIA OIL CANNOT BE DISMISSED - UBS CIO CLICK HERE
HAVEN HUNT CLICK HERE
AUTO STOCKS: TARIFF RISKS 'NOT FULLY PRICED IN' CLICK HERE
STOXX SLIDES 1%, MINERS AND AUTOS DRAG CLICK HERE
EUROPE BEFORE THE BELL: FUTURES SIGNAL PAIN AHEAD CLICK HERE
RISK ASSETS TRAMPLED AS TRUMP TOUTS TARIFFS FOR ALL CLICK HERE
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