Investors have been forced to reckon with the apparent fact Trump is serious about implementing substantial tariffs on several, if not all, U.S. trading partners. While there’s plenty of turmoil to come, Morgan Stanley Investment Management executive Jim Caron said traders are well-equipped to map out how different scenarios could impact the global economy and corporate earnings.
President Donald Trump’s 25% tariff on imported vehicles and car parts pushed auto stocks down Thursday, but the S&P 500 and other major indexes held relatively steady. It could be another sign investors are increasingly confident markets have made it past “peak tariff uncertainty,” as Jim Caron, an executive at Morgan Stanley Investment Management, put it, even if there’s likely plenty of turmoil around U.S. trade policy to come.
“There’s a difference between uncertainty and volatility,” said Caron, the chief investment officer of the firm’s portfolio solutions group.
Markets famously despise the former, he said, because it’s impossible to quantify, for example, whether the president is just talking tough on taxing imports as a negotiating tactic. Now, investors have been forced to reckon with the apparent fact Trump is serious about implementing substantial tariffs on several, if not all, U.S. trading partners.
Of course, it’s impossible to determine the extent of these tariffs in advance, never mind what sectors will be hit hardest or whether retaliation from other countries will result in a global trade war. But traders can map out how different scenarios impact the global economy and corporate earnings, Caron said, which he called “managing volatility.”
Source: Fortune
