European assets should receive a boost from President Donald Trump's pledge to toughen up links with the U.S's key trading partners, Wells Fargo's credit strategist Nathaniel Rosenbaum told CNBC on Friday.
The idea that the U.S. economy will improve over the coming months but not benefit Europe in the process doesn't make sense, argued Rosenbaum.
"Where we see some pretty good opportunity over the course of this year is this notion that the U.S. is going to do great, but Europe is going to continue to be in the doldrums," he began.
"We don't think that's realistic because if you think about trade, if the U.S. is trying to do less with China and Mexico, who are they de facto going to be doing a lot more with? That's Europe, overall one of our largest trading partners," the credit strategist continued.
Rosenbaum's remarks came on the back of a spate of news out Thursday pointing to increasingly contentious relations between the new U.S. administration and its Mexican counterpart. Mexican President Enrique Pena Nieto beat President Donald Trump to the punch by cancelling via Twitter their summit meeting scheduled for Tuesday. The latter responded with a White House spokesperson floating the idea of a 20 percent tax on Mexican imports to pay for the construction of a border wall between the two countries.
Mexico is currently the U.S.'s third-largest goods trading partner with $531 billion traded between the neighboring countries in 2015. The U.S.'s second-largest is China, whose government has been singled out for criticism by President Trump on multiple occasions since his election last November with regards to topics as diverse as its position in the South China Sea, its relationship with Taiwan and its ongoing currency interventions.
Trump also wasted no time in fulfilling his campaign pledge to remove the U.S. from the Trans-Pacific Partnership (TPP) trade deal which had aimed to strengthen trading ties between his country and the twelve that border the Pacific Ocean,representing around 40 percent of global economic output, according to the government of Australia, one of the participants.
Given the increasingly fractious relations between the U.S.and these trading partners and as sentiment surrounding the U.S. economy and its growth prospects improves, Rosenbaum believes another key trading ally could be set to benefit.
"If things get better in the U.S. we think actually Europe can get a lot better from here," he opined.
"The notion that Europe can stay bad while the U.S. gets a whole lot better doesn't make a lot of sense to us so we like European assets," the credit strategist concluded.