While I'd never pretend that I could quantify to what percent a rally might ensue should we survive the current onslaught on global trade, in a note to (I presume) JP Morgan's clients today its top quantitative strategist, Marko Kolanovic, basically echoed the sentiment in our earlier blog posts, here and here:
"The value destroyed by a trade war might be reversible if policies are reversed, while the positive impact of fiscal measures is likely to remain. This would likely catalyze a rough 4 percent market rally."
"However, if this uncertainty hangs over the market for a more extended period of time, the damage becomes more permanent and the probability of a disruptive tail event increases," he concluded. "Trade tensions continue to inflict damage to investor psychology and business confidence."
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