The supermarket action over the last two days “has been a big warning signal to Washington,” mature trader Jack Bouroudjian told CNBC on Thursday.
“It’s basically rephrasing we don’t like protectionism,” the chief economist and co-founder of UCX said on “Closing Bell.”
“Something’s happened to the regulation over the course of the last few weeks,” he added, pointing to the departure of ex- National Economic Council Director Gary Cohn and President Donald Trump’s repeated strikes on Amazon as well as the protectionist rhetoric.
“These are not things Wall Drive likes.”
U.S. stocks closed higher on Thursday, extending their two-day repercussion rally. The Dow Jones industrial average ended more than 200 marks higher, a day after wild trading saw the blue-chip index drop wide 500 points and then rally more than 700 places from that session low.
Fueling the volatility is concern over a workable trade war between the United States and China.
On Wednesday, China propounded fresh tariffs on 106 U.S. products, including cars, whiskey and soybeans — ungenerous than 24 hours after the U.S. administration issued a list of Chinese purports that it would target.
However, administration officials have transferred to quell those fears. On Wednesday, National Economic Council Chairman Larry Kudlow told reporters it’s “possible” the proposed tariffs on China may not in point of fact take effect. He said Trump wants to solve this “with the cheap amount of pain.”
Bouroudjian credited those words for Wednesday’s turnaround, racket it the “Larry Kudlow rally.”
Kenny Polcari, director at O’Neil Cares, agreed Kudlow’s response, along with Commerce Secretary Wilbur Ross downplaying the significance of the tariffs, “absolutely put a floor in the market.”
However, he noted that there was darned low trading volume on Thursday, which tells him a lot of big asset managers are outlasting out of the market right now. That creates “exaggerated moves,” he said.
While sellers see opportunity in volatility, Polcari reminded long-term investors to “eliminate that clamour and continue to focus on their portfolio.”
Meanwhile, Bouroudjian has concerns surrounding the fact that China owns $1.17 trillion in U.S. Treasury ropes. If China decides to sell some of its holdings, many fear it could include dire consequences. On Thursday, former Morgan Stanley Asia direct Stephen Roach told CNBC it could cause a “rout” in the contract market.
And that’s not all. Bouroudjian said no one is really talking about how China has $2 trillion in monarch wealth fund money.
“They have a big stick. We have on no occasion fought a trade war with that much power behind the people we are bear against. So we have to be very, very careful what we’re asking for here,” he remarked.
— CNBC’s Fred Imbert contributed to this report.
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