Reuters Insider - Trade deals will boost growth in ’20: economist

St James Gold

01/01/2020 12:53

Click the following link to watch video: https://share.insider.thomsonreuters.com/link?entryId=0_khi7c5wm&referenceId=tag:reuters.com,2019:newsml_OVBC6B7GR_930&pageId=ReutersNews
Source: Reuters Insider

Description: Trade deals with Mexico, Canada, and China will boost U.S.
economic growth next year, says Spartan Capital economist Peter Cardillo.
Political risk could slam stocks but he otherwise sees U.S. equities gaining
6% to 7%.
Short Link: https://tmsnrt.rs/2Q8KTFU

Video Transcript:

Red arrows on Wall Street Monday. The S&P 500 and Dow pulling back from record
levels, off about 0.5%. For more on the market action and a look at the year
ahead, let’s go to the floor of the New York Stock Exchange where
we’re joined by Peter Cardillo. He is Chief Market Economist at Spartan
Capital Securities. So Peter, what’s behind the selling that we’re
seeing on the Street today?

You know, I just think it’s a little bit of profit-taking. The market
registered new record highs basically on a daily basis for such a long time
without pulling back, and it was looking tired even the past couple of days.
And so today, I think investors decided to take some money off the table, but
I don’t think it’s the beginning of any major reversal.

Okay. Peter, we’ve been talking about the markets over the last few days
here on our show. Since you’re an economist, let’s take a look at
the economy, what are you looking for? How optimistic are you about 2020?

Well, I’m optimistic on 2020. The reason why I’m optimistic is that
these two big events that is the trade events are going to boost the economy
by at least 0.3% to 0.4%. The big one will be the US-Canada-Mexico deal and of
course the relaxation between China and the United States will also help. That
should also add some spark to the economy. And I think the biggest thing that
we can avoid is China perhaps heading towards a hard landing, and so
that’s key for the global economy. That’s all due to the prospects
of the North American trade deal and of course the relaxation between China
and the United States.

So around what percent growth are you looking for?

I’m looking anywhere from between 2.3%, possibly 2.5% on an average for
all of 2020. 

And what are the risks that you see facing the economy in 2020?

Geopolitical obviously. Another great risk would be if there would be a
reversal I’m thinking between the Chinese and the United States, but I
doubt that would happen. The biggest risk, as I said before, would be
geopolitical.

Alright. And what does that translate to for investors in terms of market
performance?

I think we’re headed for another positive year, certainly not the year
that we saw in 2019. I think we can see the averages gain maybe between 6% and
7% for all of 2020. We’ll probably have some sort of a pullback. Of
course there’s the political risk as well. That risk could deflate the
market by 10% to 15%. But then after that, it would rally.

Alright. Thanks a lot, Peter. So you see a 2.3% to 2.5% economic growth and 6%
to 7% growth for stocks. Thanks a lot. 

Thank you.

Our thanks to Peter Cardillo, Chief Market Economist at Spartan Capital
Securities, coming to us from the NYSE. I’m Fred Katayama, and this is
Reuters