I wanted to understand what is your view on the back and forth commentary coming in from Donald Trump because this weekend it has been pretty good. We have not got any sharp comments from him.Ed Yardeni: Yes, any day or weekend without the president commenting on tariffs is likely to be a good day for the markets.
And look we are all getting a little bit tired and maybe jaded about the volatility and the comments coming out of Washington. There has been a movement in a more dovish direction on the whole trade issue.
The markets perceive that by July 1st which is the end of the 90-day postponement period, liberation day was April 2nd, and then on April 9th we were liberated from liberation day for 90 days.
I think by then there will be lots of pieces of paper signed by various countries with the United States coming up with frameworks for improving trade relations and that will help a lot. I do not quite know that we are going to make as much progress on China. There may be more pain in that area and I guess the two countries want to see who can take the pain the most and blink first.
What happens if China does not blink. I mean, what happens?Ed Yardeni: Well, the United States will blink. The United States has already blinked. The president has said that numerous times that he welcomes discussions with China. He has even said that there have been discussions with China, although the Chinese say there have not been any discussions whatsoever. This a very strange situation where usually when you have a negotiation, you got two people in the room arguing and shouting with each other and finally coming up with a deal and coming out of the room smiling like everything is fine. In the current situation, we have Trump going into the room by himself and coming out every now and then and telling us that things will be okay. So, we have to kind of conclude that it is in both countries interests to come up with some accommodation and so it will be incremental but clearly, there will be some pain in the trade relationship between the United States and China.
So, for emerging market investors and for our viewers who invest in India, should they say dollar has peaked, America is going to slow down and even though the quarter gone by numbers were not great, in coming quarters the slowdown would be visible so one should buy emerging market equities?Ed Yardeni: I am not bearish on the dollar. I mean, it has gone down about 10% based on the DXY index, but the DXY index is very heavily weighted towards the euro, so the weakness in the dollar is basically reflecting the strength of the euro and I do not know what the excitement is about running into the euro. I mean, obviously stocks are cheaper there and maybe that is part of the story there.
But on a trade weighted basis as calculated by the Fed, the dollar is down about 5%, no big deal really. I do not think currency is going to be the big issue for emerging markets. It is going to be trade and India stands out as probably likely the biggest emerging market to probably get the be best deal with the United States for both countries.
