It’s just a matter of time before Trump flashes on rate: Chris Wood

Mumbai: Jefferies’ worldwide head of the stock strategy, Christopher Wood, said that the Trump government imposes a rate of 50% on Indian input, is no reason to sell Indian shares. Instead, it is a reason to buy them, because “it is only a matter of time before Trump withdraws the attitude, which is not in the interest of America.”

“It is worth noting that the track record makes it clear that it pays to fulfill the Donald,” said Wood in his last ‘Greed & Fear’ report.

Wood said that the Trump government’s decision to impose an additional rate of 25%, so that the total levy is brought to 50%, on Indian goods “somewhat unusual” is in view of the relatively small trade surplus of India with the US and the “very important geopolitical relationship” with Washington.

The second tranche of 25% rates seemed linked to the purchase of Russian oil by New Delhi.

“China has bought much more oil from Russia, but is not punished in the same way,” he said. “The singling from India in this way is not what most people would have predicted.”

According to Wood, Donald Trump has succeeded in bringing China, Russia, India and Brazil together like never before. “Indeed, Brics as a group group is regalvanized.” Wood said that the shares of India had registered the largest underperformance compared to other markets in 15 years in the 12 months to July. He attributed the weakness to “very high ratings” and “a heavy schedule of issuing shares.” According to him, it is too late to reduce India with ratings now in the area of the average of 10 years 63% prize for profit (PE) ratio premium about emerging markets.

American interest rates
Wood said that the slightly better-this-softening inflation data in July have eliminated the expectations of the American Federal Reserve marginal. The basicase remains for a rate reduction by the American Central Bank in September and that the US dollar remains in a downward trend.

“Anyway, for a data-dependent Fed that is not willing to project ahead, which is more or less where the Powell-guided Fed has been lately, there is still an argument to stay on hold, because the reality is that the reported inflation is still well above 2% Yoy-target white,” he said.

Wood said that the most important director of the Trump government on Jerome Powell is not worried about the state of the economy, but rather to reduce the costs of maintenance of debts.