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The market (^DJI, ^IXIC, ^GSPC) seems to breathe a sigh of relief after tariffs on imports from Mexico and Canada were delayed. Barclays head of US equity strategy Venu Krishna sits down with Julie Hyman and Josh Lipton on Market Domination to discuss his concerns about the policy environment around President Trump's tariff threats and China's own retaliatory tariffs.
"Ever since the election, I would argue that the market has been disproportionately pricing the good news that is the pro-growth policies like deregulation [and tax cuts] are being priced quite optimistically," Krishna says.
"What is not being priced is the impact of a more aggressive stance on immigration and a more aggressive stance on tariffs, because if you talk to the majority of the economists, the view is that these two, tariffs and immigration, on the margin are definitely more inflationary and will have a negative impact on growth," he adds, explaining that "the question" is "to what extent is that a buffer to some extent for the pro-growth policies?"
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The strategist highlights accelerating earnings growth but notes, "The problem for this market is on the valuation front."
"I'm not arguing [valuations are] rich, but it's quite fully valued," he says, adding that what that means is "any negative catalyst" could be especially impactful for the market.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
This post was written by Naomi Buchanan.