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Dick Bove: Cohn's Loss May Lead to Bad Trade Deals, Roaring Inflation

Dick Bove: Cohn's Loss May Lead to Bad Trade Deals, Roaring Inflation
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By    |   Wednesday, 07 March 2018 02:20 PM

Economic guru Dick Bove warns savvy investors that the “critical loss” of staunch free-trade supporter Gary Cohn from the White House will eventually lead to higher inflation and bad trade deals.

“Cohn's resignation removes the indirect presence of the nation's business leaders from the White House. It isolates the president on economic matters as policies are being established that could result in higher inflation and erode many of the benefits of the tax cuts,"  Bove wrote for CNBC.com. 

Cohn, who was president and chief operating officer of Goldman Sachs before joining the Trump administration last year, didn’t cite the reasons for resignation. However, he was a major proponent of free trade who was said to disagree with President Donald Trump’s plan to slap stiff tariffs on imported steel and aluminum.

"This departure is a significant loss to the nation,” Bove claimed.

In the wake of Cohn’s resignation, Trump looks set to impose those steep tariffs on imported steel and aluminum this week, a move that could spiral into a global trade war, Reuters explained.

Trump also has stepped up pressure against China to develop a plan to reduce its trade imbalance with the United States by a billion dollars.​

Cohn, the architect of a tax overhaul passed in December, was seen as a stabilizing force within the Trump administration. His departure is seen strengthening the hands of those advocating a protectionist agenda.

For his part, Bove praised Cohn's knowledge of commodities, his ability to negotiate intricate deals and his understanding of how to operate large financial enterprises,

"His departure from the White House means that the advice he provided to the president on economic and financial matters will be lost and perhaps not replaced. The president is, therefore, being isolated from those who could help fashion more effective, less-combative trade deals,” the equity research analyst at the Vertical Group wrote.

“There is no one in the administration with his unique knowledge base, experience and operating skills,” Bove said.

"His departure from the White House leaves a vacuum. Undoubtedly the President is right, the United States must renegotiate its trade deals. It is unacceptable for this nation to have a trade deficit of this magnitude. However, if one were to select the member of the White House best suited to negotiate change in a fashion that would not infuriate the country's allies and trade partners, Cohn would have been that person," Bove wrote.

Meanwhile, stocks on Wall Street fell as trade fears returned to the market.

“There is more of a political worry that has crept back into the market,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.

“It’s not just the tariffs, but the broader White House changing ... all those things are undercurrents which are affecting market sentiment in the near-term.”

(Newsmax wire services contributed to this report).

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Economic guru Dick Bove warns savvy investors that the “critical loss” of staunch free-trade supporter Gary Cohn from the White House will eventually lead to higher inflation and bad trade deals.
dick bove, cohn, trump, trade, inflation
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2018-20-07
Wednesday, 07 March 2018 02:20 PM
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