(Bloomberg) -- Bruce Richards, chief executive of distressed-debt investor Marathon Asset Management, said amid the White House tumult the presence of former Wall Street executives Steven Mnuchin and Gary Cohn in the administration is critical.
"They are needed more than ever at moments like this," Richards said in an interview with Bloomberg Television on the sidelines of the SkyBridge Alternatives Conference in Las Vegas. "It is a steady hand that comes from Steven Mnuchin and Gary Cohn."
Richards said that while there are questions about President Donald Trump’s actions that need to be answered, he doesn’t see Treasury secretary Mnuchin and National Economic Council director Cohn leaving the administration.
"It is not clear to me, just that the President has some questions to answer, that they will jump ship," Richards said.
Richards said Congress should set up an independent commission to review actions by President Donald Trump and his administration and decide whether to appoint a special prosecutor. Trump has been under fire after dismissing FBI director James Comey last week. On Tuesday the contents of a memo written by then- director Comey surfaced, which is said to detail a request by Trump to drop an investigation of former National Security Adviser Michael Flynn.
"None of us in the markets yet know what’s fake and what’s real," Richards said. "It’s hard to separate as an independent person, that tries to be objective, what’s fake news, what’s partisan and what’s real."
The Trump administration’s policy proposals, including regulatory relief and tax reform, have been a positive for U.S. stocks but will be harder to accomplish until questions about the White House’s actions are resolved.
"We need to get this matter as a country behind us," he said.
Richards also said the so-called Trump trade, which has helped fuel the U.S. stock market, is winding down.
"This Trump trade that we have all embraced and has driven the market to new highs in equities is coming to an end," he said.
Richards, who is bullish on Europe given its improved economic situation, is prepared to take advantage of distress in the U.S. retail sector once high-yield bonds fall further. His firm is also raising cash because high-yield spreads are too tight to invest.
"The Trump issue might cause a retrenchment in the markets that will play well since we do have some cash piling up" said Richards.