Citi’s US equity strategist says the bank will be looking for trading opportunities this week on election-induced market volatility.
Speaking in a new interview on CNBC’s Squawk Box, Citi’s Scott Chronert says that the S&P 500 is mostly fair valued at current levels, but that the election could skew the market in either direction depending on which candidate takes the White House.
According to Chronert, a “Trump rip” or a “Harris dip” could be taken advantage of.
“What we’re getting at here is that we understand that there’s the aninal spirits that come with Trump being more pro-business. We got that, but your starting point is a fairly extended valuation circumstance predicated on very strong earnings growth followthrough into 2025.
Our concern is with that setup, you go into a Trump win and you introduce tariffs into the discussion. Now to your earlier point on supply chain constraints, we’ve got something similar to that unfolding and so what ends up happening is that the ’25 growth expectations we think become a bit more suspect as we navigate tariff actions.”
Chronert says the market implications essentially boil down to Trump’s tariffs and Harris’ taxes.
“Our view on this is to try to steer clear of a lot of the social issues that… may end up influencing the outcome.
My world is much more fundamentally focused. And so when we look at the fundamental influences at work here, that’s the way we’re thinking about it. It really comes down to Trump and tarriffs, and Harris and taxes.”
Strategists at JPMorgan Chase recently revealed their election playbook, saying that the “Trump trade” had clearly played out in early October, alongside former President Donald Trump’s surge in betting markets.
If Vice President Kamala Harris wins, JPMorgan says its recent outlook for a weaker dollar will be reinforced, but the bank says things could look much different under a Republican victory.
“Despite the Republican party’s desire to weaken the dollar, their policies are likely to have the opposite effect in our view.
We continue to see tariffs and fiscal policy as the main drivers for global currency markets. More government spending and universal tariffs could pave the way for an extended period of “U.S. exceptionalism” to drive U.S. interest rates and the dollar higher.”
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