What Market Players Are Saying About Cohn’s Departure

 In U.S.
The resignation of Gary Cohn as top White House economic adviser roiled markets Wednesday, sending the dollar down against the yen and U.S. stock futures lower. While global equities recovered from a trade-induced blow last week, graver concerns are emerging.

The White House said late Wednesday that Cohn is leaving his post, a move that followed his apparent loss in a battle to halt U.S. tariffs on aluminum and steel. A separate report showed President Donald Trump’s administration is considering imposing tariffs on a broad range of Chinese imports for its alleged theft of intellectual property — a further sign of protectionist advocates’ influence on the agenda.

The following are a selection of comments from analysts and investors:

‘Voice of Reason’

Paul Donovan, chief economist at UBS Wealth Management:

  • “The departure signals the defeat of anti-protectionism, or reduces the influence of anti-protectionism.”
  • “Any tax on trade, in any country, means consumers are going to be purchasing goods they would not chose to buy, at prices that are higher than they should have to pay, to subsidize less efficient companies.”

Regulatory Relief

Peter Boockvar, chief investment officer of Bleakley Financial Group:

  • “From a major policy perspective, the heavy lifting was done via the tax bill. A limit on regulatory reform will continue regardless of Cohn’s presence. Thus, the only thing left of importance for Cohn in my view was him being a firewall against dumb and damaging economic initiatives. Tariffs qualified as such.”

Wag the dog

Tim Ash, a senior emerging market strategist at BlueBay Asset Management LLC in London:

  • “Something seems to have changed Trump’s decision set – perhaps that is the ever tightening net from the Mueller Russia inquiry with Jared’s increasing difficulties and the departure of Hope Hicks. Perhaps what we saw with the steel/aluminium tariff announcement last week was another attempt by Trump to deflect attention from problems within the White House, and Mueller.”

‘Most Meaningful’

Michael O’Rourke, chief market strategist at JonesTrading Institutional Services:

  • “Of all the Trump administration resignations, this will be the one most meaningful for markets.” 
  • “Cohn was the administration official financial markets had the most confidence in. This opens the environment up to whole new wave of uncertainty. The likelihood of a trade war just jumped dramatically.”

Treasury Tremors

Rabobank strategists led by Richard McGuire: 

  • “We would challenge the oft-cited view that protectionism is bearish for USTs as it promises higher import costs (and, thus, inflation) while also portending a possible divesture of U.S. debt by China in retaliation.”
  • “We would instead argue that higher import costs, in representing a negative supply shock will ultimately weigh on demand. Tit-for-tat trade measures, meanwhile, point to lower world trade volumes which, in turn, promises lower global growth.”

Retaliation Risk

Ben Emons, chief economist at Intellectus Partners LLC:

Recent Posts
Get Breaking News Delivered to Your Inbox
Join over 2.3 million subscribers. Get daily breaking news directly to your inbox as they happen.
Your Information will never be shared with any third party.
Get Latest News in Facebook
Never miss another breaking news. Click on the "LIKE" button below now!