The relative calm in US stock markets has an expiration date, according to Wilbur Ross: late June.
The famed corporate raider and former secretary of commerce expects President Donald Trump’s administration to make meaningful progress on trade pacts by the end of next month. Otherwise, Ross said in an interview with Bloomberg News, investor sentiment will sour.
“I think we’re getting to the home stretch of investor confidence,” said Ross, who served as commerce chief during Trump’s first term. “If it takes too much longer, investors will say, ‘Oh, there’s not going to be a deal. We’re going to have this tit-for-tat of escalating tariffs.’”
Markets have largely tuned out trade headlines in recent weeks after such news whipsawed stocks last month. A little more than a third of the S&P 500’s recent daily moves through Thursday could be explained by tariff-related headlines, according to an analysis by 22V Research. In early April, it was 80%.
While stocks dropped on Friday after Trump threated to impose aggressive tariffs on the European Union, a risk-on mood emerged on Tuesday after he extended the deadline on those levies. Still, in both cases, the moves weren’t as volatile as traders were used to seeing in April.
Trump and his trade wars with virtually the entire rest of the world have become the No. 1 market barometer since his inauguration in January. The S&P 500 Index plunged to the brink of a bear market in April after he unveiled a harsh set of levies on trade partners. Major indexes have since recovered.
Even so, in recent weeks, trading volumes have dipped and moves have minimized as investors look for more clarity on trade policy.
“What markets hate is uncertainty, and uncertainty is certainly where we are right now,” Ross said. “I think the market will rally strongly if we get through a large number of these major players with deals.”
For his part, Ross expects agreements are forthcoming. He said India is one candidate to strike a deal early.
“Vietnam is dying to make a deal with us, and I think they will,” Ross said. It’s hard to know what country will get it done first, he said, “but I do think that as you get to the end of June, people are going to be realizing they really have to get going.”
Written by: Matthew Griffin and Catherine Lucey @Bloomberg
The post “Wilbur Ross Says Investor Confidence Risks Fading Within Weeks” first appeared on Bloomberg