Long-Time Wall Street Bull: Trump Tariffs Could Emerge as a Black Swan Event for Stocks

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If the tariffs of Donald Trump, the President of the United States of America, go into effect, one of the long-time bulls of Wall Street suggests that stocks will get hammered.

Jeffrey Saut of Raymond Jame says that the sidelines is the safest place for investors until there more clarity is given.

On CNBC’s ” Trading Nation,  the chief investment strategist of the firm said on Friday: “If this spills over into a full-blown trading war, then I have no idea where the bottom is going to be in this.

“I’m just kind of sitting on my hands right here until the dust clears.”

Last Thursday, President Trump announced that the United States would impose tariffs on aluminum and steel as early this coming week. The news ignited a deep stock sell-off. The Dow dropped 3 percent, and the S&P 500 fell 2 percent for the week ending Friday.

He added: “We’ll have to see what happens in the next couple of weeks because I think it’s going to take that long to sort it out.

“If you’re going to see a retaliatory move, you’re going to see it in the next couple of weeks.”

According to Saut, the said move is likely to spark anger from the global community and possibly create shock waves through the market.

However, Saut acknowledges that the announcement of the tariff surprised him. He said that he is not turning his back on his secular bull market view.

He contends that the strength of earnings and economic growth could maintain stocks to be fundamentally sound for as long as a decade. Saut also cites that under-investment is a long-term bullish signal.

He stated: “I do think it’s noise in the short run. I think it’s going to present a buying opportunity in the long run.”

In the meantime, Saut is not willing to recommend purchasing stocks. He says that it is not unreasonable for the stock market to retest the correction lows last February.

Saut stated: “I am not going to step in here and buy a falling knife.”