‘There will be a selloff’: Portfolio manager warns investors will lose patience with Trump
U.S. stock markets hit fresh intraday records at the open on Tuesday as investors shook off the latest Trump controversy and fears the president’s “pro-growth” agenda could be sidelined.
The S&P 500, Dow Jones Industrial Average and the Nasdaq Composite moved higher shortly after the opening bells as White House officials raced to contain the damage from reports late yesterday that U.S. President Donald Trump shared classified intel with Russian officials last week.
“I’ve been surprised that the market’s been so resilient here,” said Ryan Lewenza, portfolio manager at Turner Investments, in an interview with BNN. “Every time one of these blunders come up I think it’s going to create a short-term selloff in the market, and nothing happens.”
“But they’re stockpiling and there will be a selloff here over the next little while if these keep happening.”
Do you still have faith Donald Trump can deliver on his fiscal agenda?
Lewenza said the latest White House controversy creates doubt about whether Trump will be able to deliver on key fiscal agenda priorities that have helped fuel stock market gains since he took office, adding he thinks too much “time and calories” are being expended on damage control.
The Trump agenda remains intact, despite the recent flurry of distractions, according to Wells Fargo Senior Global Equity Strategist Scott Wren. “I think the new administration is doing a lot of things behind the scenes -- they are not distracted by this,” he told BNN in an interview.
Wells Fargo is still expecting the White House and Republican administration to deliver on its so-called pro-growth agenda of tax cuts and regulatory reform – but not until 2018 or later, he said. “We are early in the game. I do think we are going to see some progress but I am going to stick to our story that I don’t think that progress is going to come soon."
Trump took to Twitter on Tuesday to defend his decision to share intelligence with the Russians during a White House meeting last week, saying he had an "abolute right" to share "facts pertaining to terrorism and airline flight safety".
But Trump faced a torrent of criticism, with the disclosures late on Monday roiling the administration as it struggled to move past the backlash over Trump's abrupt firing of FBI Director James Comey, who was investigating the president's ties to Russia, last week.
That political turmoil, analysts said, was playing out via the dollar, whose broad index had risen to 14-year highs earlier this year on the view that Trump's plans for tax cuts and infrastructure spending would boost growth and inflation, but which fell to six-month lows on Tuesday.
Fears are growing among investors that Trump might not last his first term, analysts said, and that even if he does, there were too many political distractions for him to be able to push through his economic stimulus program.
"(The story about Trump and Russia) probably is playing out as a weaker dollar on the view that Trump may not be around long enough to deliver his tax reform, which is at least partially priced into the dollar," said RBC Capital Markets Currency Strategist Adam Cole.
-- With files from BNN