Fallout from a trade war biggest risk to the market: Wall Street veteran

Amid talk of a potential trade war, Wall Street veteran Peter Boockvar said more changes to the monetary landscape are the biggest risk to the market right now.

“When The Fed is shrinking their balance sheet and raising interest rates it makes the landscape more vulnerable to these type of externalities,” Boockvar, chief investment officer at Bleakley Advisor Group, a $3.5 billion wealth management firm, told CNBC, regarding potential trade wars.

Earlier this week, in an attempt to fix what he calls unfair trade practices, President Donald Trump unveiled a list of Chinese imports he plans to target with tariffs. On Wednesday, China announced retaliatory trade tariffs on 106 U.S. products, including soybeans, cars and chemicals. The tariffs target up to $50 billion of U.S. products annually.

China’s retaliatory tariffs, Boockvar said, would further weaken the market, raising the cost of doing business for American companies and diminish business for the U.S.

“China is going to buy their soybeans from Brazil and Argentina instead of the U.S.,” he said Wednesday on “Power Lunch.”

Boockvar said he doesn’t like the negotiating tactics currently being employed by the Trump administration and said people need to understand the “collateral damage” of tariffs.

“Take the farmer in Iowa that has been through a six-year bear market with prices falling,” he said. “Now you wake up and say, ‘my biggest customer, I can’t sell to. And if I do, it’s going to cost me this much more.’”

Stephen Orlins, president of the National Committee on the United States-China Relations, said a “tit-for-tat” trade war between the U.S. and China will only “disadvantage a machinist at Boeing; a farmer in Kansas; a dock worker in Houston.”

“The American loses from this,” he said on “Closing Bell” Wednesday. “The American consumer loses from this.”

In fact, the negotiating tactics currently being used by the United States have “burned a lot of bridges,” said Patrick Chovanec, chief strategist at Silvercrest Asset Management.

“The United States is isolated and vulnerable to Chinese retaliation that we don’t need to be,” Chovanec said on “Power Lunch.”

Chovanec, who is also an adjunct professor at Columbia University’s School of International and Public Affairs, said a better method would be to work together with other countries to put long-term pressure on China in the face of retaliation.

The market sank after news of a possible trade war broke, with the Dow Jones industrial average down 510 points at its low. The S&P 500 and Nasdaq composite fell in early trading. All three major indexescame roaring back, with the Dow rallying more than 700 points from the lows of the day.

David Katz, chief investment officer at Matrix Asset Advisors, expects a strong earnings season ahead. However, he said unless a solution is reached on trade, strong earnings won’t have a great impact on the market.

“If a trade war were to take place, the markets would go down even more than they have,” Katz said on “Power Lunch.”

“We worry about a lot of things in the world right now,” he said. “[But] we worry about the trade war the most.”

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