The uncertainty created by tariffs can reduce pressure on various ways of corporate activities from investment to mergers to acquisitions to debt issuance. That’s the perspective of Bank of America’s equity and quantitative strategy team, led by Savita Subramanian. “The biggest risk of tariffs is perhaps the slowdown in self-fulfilment due to corporate paralysis,” the strategist wrote in a report on Tuesday. Subramanian noted that such a moratorium occurred in 2018 during the term of President Donald Trump. BOFA added that more and more investors believe that the U.S. will soon suffer from the possibility of stagnation, when high inflation is accompanied by slow economic growth. Tariffs and deportations are inflationary, while uncertainty and less demand are recession. However, banks are not troubled by this concern. “Although it happened about 5% of the time in history, investors (investors) allocated 59% of the probability risk,” Subramanian said. Bank of America predicts that Trump’s policy will increase PCE inflation by no more than 0.1%, and the blow to GDP will be smaller. Subramanian kept underweight in her advice on technology stocks due to headwinds of tariffs, which she said was highly exposed to China and the bare supply chains around the world. Subramanian noted that the short- to medium-term beneficiary of Trump’s tariffs may be U.S. Steel. “Our steel industry coverage should benefit from higher prices, as customers sold to the United States are mostly produced in the United States,” she added. She added that despite this, rising domestic steel prices could also lead to pressures for lower demand, which ultimately hurts prices. – Michael Bloom of CNBC contributed to the report.
ABOUT US
Our news website delivers comprehensive coverage on US news, economy, politics, and world events, ensuring you stay informed on the latest developments. We provide timely and accurate news to keep you updated on the most important stories. Stay connected with us for in-depth analysis and breaking news from around the globe.
Contact us: contact@realtimeheadlines.com
© Real Times Headlines - 2024 | All Rights Reserved