Chris Wood Urges Shift From Us To India, China Amid Tariff Tension, dollar Decline, Earnings Slump

Jefferies strategist Chris Wood has advised investors to standard backmost vulnerability to US equities and alternatively summation allocations to India and China, citing increasing signs of economical strain successful nan US and a weakening dollar. In his April 24 version of nan Greed and Fear note, Wood highlighted that “investors should usage immoderate rally successful US equities arsenic an opportunity to trim exposure,” and redirect costs towards India, China, and Europe, which are amended positioned for growth.

The statement flagged that parts of nan American system whitethorn already beryllium successful recession and pointed to Donald Trump’s evident retreat connected tariff tensions pinch China. “Trump does not person nan cards successful his tariff crippled pinch China,” Wood wrote, noting that while nan US President has claimed ongoing negotiations, Beijing has been patient successful denying immoderate specified talks without a rollback of existing tariffs.

Backing nan lawsuit for a pivot to Asian markets, Greed and Fear reiterated that nan US dollar has entered a semipermanent downtrend. “A awesome diminution successful nan US dollar has begun,” it said, calling nan caller pullback a specified correction of an overvalued currency. This rate shift, mixed pinch anemic firm earnings, adds to nan bearish lawsuit for US equities.

“The Citigroup US net revision scale has now been successful antagonistic territory for 17 consecutive weeks since mid-December,” Wood pointed out. The latest reference for nan week ended April 11 was -0.62—the lowest successful 5 years. The scale reflects nett EPS estimate revisions, pinch a antagonistic people indicating much downgrades than upgrades for listed US companies.

According to Wood, location are concerns that a recession whitethorn already beryllium underway successful parts of America. This fearfulness has been noted by respective analysts, including Goldman Sachs, which has raised nan probability to 35% complete nan adjacent 12 months. 

The International Monetary Fund (IMF) has besides mentioned this anticipation successful its latest economical forecast. The caller information suggests that nan subprime American user has been experiencing a recession for immoderate time, pinch estimates indicating that nan apical 10% of Americans are now responsible for 50% of consumption, arsenic stated successful nan Greed and Fear note.

The statement pointed to rising financial accent among American consumers, citing a Federal Reserve Bank of Philadelphia study from April 9 that showed that nan stock of in installments paper borrowers making only minimum payments has climbed to a 12-year high. JPMorgan besides reported that charge-offs successful its in installments paper segment—loans deemed unrecoverable—rose to 3.58% successful nan first 4th of 2025, marking a 13-year high.

Meanwhile, arsenic Donald Trump nears nan 100-day people successful office, his handling of nan system is drafting little marks from nan public. A Reuters/Ipsos canvass showed that only 37% of respondents o.k. of nan President’s economical performance, contempt Trump many times highlighting a autumn successful user prices.

However, Wood pointed to a different aspect. In his note, Wood raised concerns astir an impending downturn successful nan United States. The statement highlighted a increasing statement of grounds indicating a important diminution successful economical activity, surpassing nan implications of unit income information to stress a clear deterioration successful nan US economy.

The US and China engaged successful discussions connected Thursday successful an effort to reside nan ongoing waste and acquisition conflict betwixt nan 2 largest economies successful nan world, arsenic stated by President Donald Trump. The specifications of nan talks were not instantly disclosed, but President Trump informed reporters astatine nan White House that meetings had taken spot that greeting pinch Chinese officials.

China responded to President Trump's earlier assertion that a waste and acquisition statement pinch Beijing was nearing completion. Following nan imposition of 145% tariffs connected Chinese equipment by nan White House earlier this month, China retaliated pinch its ain tariffs and imposed restrictions connected nan export of captious minerals to nan U.S. Additionally, China issued a informing earlier this week that it would return retaliatory measures against immoderate countries entering into waste and acquisition agreements pinch nan U.S. that are detrimental to Beijing's interests.

Published on: Apr 25, 2025 7:13 PM IST