US Markets

Ironically, Trump's plans may not help consumers: Richard Bernstein

Dow's march to 20K

The pro-growth, "America first" policies proposed by the Trump administration could have varying effects on the U.S. consumer, Bernstein Advisors CEO Richard Bernstein told CNBC on Wednesday.

"One of the ironies that's behind what's being taught about the policy is that we may not help consumers," he told "Squawk Box." "We may get jobs, we may have a tight labor market and wages might go up, but if we do have trade barriers or we do have more inflation, purchasing power may go down."

If the new administration successfully places a border tax on U.S. imports, prices on goods sold in places like department stores, which import huge portions of their products, could rise.

Bernstein said that kind of imbalance is normal in the mid-to-late period of an economic cycle, and that the shift is being reflected in the markets.

"What's happening is you're seeing a rotation away from defensive, quality, consumer-oriented stocks towards much more cyclical, lower-quality stocks that are likely to benefit from some of these policies," he said.

David Bailin, global head of managed investments at Citi Private Bank, told CNBC that while Donald Trump's proposed plans could have an incredibly significant and positive economic impact, the downside risk to the country is noteworthy as well.

"I think the tax policy they're talking about and how they're going to deal with capital expenditures definitely could be negative in terms of imports," Bailin told "Squawk Box."

Under the House Republicans' tax plan, which runs close to Trump's, businesses operating internationally would be able to deduct their domestic capital equipment expenditures in full.

"And the pressures within the country, we're at 4.6 [percent] unemployment, we're going to be taking steps against immigration, and so we're going to cause a situation where there are limited supplies of labor," Bailin added.

Diversification key to investing in 2017: Pro

When playing the market in the face of these risks, Neuberger Berman's Erik Knutzen told CNBC the most important thing is to stay nimble.

"We're going from an environment that was led by central bank stimulus. Transparent, technocratic, very stable environment. Low volatility, low risk," said Knutzen, the firm's multi-asset class chief investment officer.

"We're now moving to an environment where national orientation [and] fiscal policy-led growth is going to be dominating. That is sloppy, that is messy, that is not transparent. We're going to see a lot of volatility over these next 12 months," Knutzen said.

He advised investors to "be ready to take advantage of that volatility" by diversifying their portfolios, and mentioned where his team is invested for 2017.

"On the margin, we're buying U.S. small-cap stocks, selling global large cap, selling investment-grade and high-yield bonds, buying bank loans," Knutzen said, adding that these areas are "where we can take advantage of this rising rate, rising inflation expectation environment."