Trade Spat of Little Concern for This Top U.S.-China Investor

(Bloomberg) -- Escalating trade tensions won’t have a material impact on the U.S. economy, which is still basking in the glow of President Donald Trump’s tax cuts, says a fund manager who’s beating his global peers by betting on U.S. and Chinese stocks.

As rhetoric between the two superpowers threatens to balloon into an all-out trade war, Noah Blackstein isn’t changing his growth-focused investment strategy. His C$1.6 billion ($1.2 billion) Dynamic Power Global Growth Class has outperformed 554 global peers over the past 10 years, while the C$1.2 billion Dynamic Power American Growth Fund is in the 99th percentile among its U.S.-equity cousins in the past five years, according to data compiled by Bloomberg.

“I don’t believe we’re in a tit-for-tat trade war with China that should have a material impact on the U.S. economy,” Toronto-based Blackstein said in a phone interview Wednesday. “Could this escalate or devolve into something? We always want to be cautious, but for right now, I think the immediate impact of the fiscal stimulus via the tax cuts has kept the American economy incredibly strong and resilient.”

Blackstein said the risk of the Federal Reserve tightening monetary policy too quickly poses a bigger threat to the U.S. economy than trade and he believes Trump will accomplish his goal of lowering tariffs on U.S. goods without damaging the economy. Germany’s top automakers are reportedly supportive of eliminating all tariffs on automobiles shipped between the U.S. and European Union, showing Trump’s rhetoric is having some impact, he said.

“If there is an impact from all of these macro-economic and trade-war issues, then it will be reflected ultimately in the revenue and the earnings of the companies I own and I’ll make a decision then,” Blackstein said. “Until then, it’s something I’m watching but I’m not a top-down investor, I think top-down investing has been a disaster.”

He pointed to people who wrongly predicted that the market would crash when Trump got elected or when the U.K. voted to leave the EU.

“Even for the ones who picked the black swan event, the market reaction was the exact opposite of what was predicted,” he said.

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