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How Donald Trump and the Fed could trigger a "shock and awe" in the market



The executive director of JPMorgan, Adam Crisafulli, has high hopes for the stock market, but only if the powers in place take the necessary steps.

"The upside scenario" shock and fear "implies the immediate cancellation of all US tariffs in China, forcing some rate sensitive companies to raise their targets for 2019, while the Fed is committed to maintaining its tariffs. reserves at approximately $ 1.3T +. If all this materializes, then the SPX would easily go to 3K. "

For Crisafulli's bullish outlook to play out, the S & P 500 Index

SPX, -0.05%

He would need to transfer more than 200 points, or about 7%, to his current level, according to his rating to clients cited on CNBC Wednesday.

The Fed has still not decided how much bank reserves will be on its balance sheet. Lewis Alexander, chief US economist at Nomura Securities, said the reserves are expected to be $ 1.1 trillion from the current level of $ 1.6 trillion.

The FOMC meeting in March should give more color.

As for Trump and China, Wall Street analysts have the feeling that, even if the president has abandoned plans for new tariffs on Chinese products, the stock market would suffer if existing tariffs were not removed.

Lily: US companies fear a worsening of their relations with China

Crisafulli, however, acknowledged that the combination of the Fed's pivot, improved corporate performance and the easing of trade tensions in China is primarily embedded in the S & P 500 at current levels .

"There are scenarios in which these problems could still surprise upwards, but the chances of resolving them do not seem huge," he wrote.

At the last audit, the Dow

DJIA, -0.28%

and the S & P are trading down, while the Nasdaq

COMP + 0.07%

was bent higher.


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