Economics
Contrarian Strategist Says Buy Risk as Trump to Reach China Deal
- Alpine Macro co-founder says Trump using trade war to bait Fed
- Powell signaled openness to cut if needed over trade tensions
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Chen Zhao, known for his prescient bets against tech stocks in 1998 and in favor of U.S. equities in March 2009, says it’s time to buy riskier assets on the prospect of a U.S.-China trade deal.
Zhao’s latest contrarian call is based on his theory that Donald Trump’s tariff threats are mostly driven by the president’s insistence that the Federal Reserve cuts interest rates. The thinking is that jawboning on China will lead economists to lower their growth forecasts and compel the Fed to respond. That, in turn, would probably boost the U.S. stock market, which Trump views as a key selling point in his 2020 reelection bid.