Art Hogan may soon give his top market risk the boot.
The B. Riley FBR chief market strategist says President Donald Trump's decision to name Larry Kudlow as chief economic advisor may help thwart a trade war.
Hogan says Kudlow, who has been a CNBC senior contributor, will be a balancing voice in the White House when it comes to conducting economic policy.
"He's a very thoughtful man. He certainly believes that free market capitalism is the best path to prosperity," Hogan said Wednesday on CNBC's "Trading Nation. "
The comments came on news that Kudlow accepted the role of National Economic Council director.
Hogan, who has known Kudlow for decades, says he'll be a great sounding board on trade. Last Thursday, Trump signed tariffs on aluminum and steel imports, and fears of retaliation have been circulating through global markets.
"If, in fact, we're using tough language upfront to use this as a negotiating tool, that's OK — as long as the end result is something that's a little more flexible and a little more business-friendly," he said. "The problem is, that's a very tough needle to thread. And if you start off talking tough and there's retaliation, it's hard to unwind that. So, I'm very glad that Larry is going to have a seat at the table and help modulate that conversation."
In October, Hogan listed a China trade war among his top risks to the bull market. Now, he says it has become an even bigger threat — overshadowing monetary policy risks.
But the long time bull isn't changing his year-end target of 3,000, about 9 percent above current levels. He concludes that economic and market fundamentals are still strong. But the situation is fluid.
"What would change that is a mistake, a policy mistake — a trade war or retaliation for tariffs such as economic activity slows down and therefore earnings decline," Hogan said. "If we make a significant policy mistake, whether it's too aggressive monetary policy or just not well thought out trade policy, I think that puts at risk both the economy and the earnings capability for the S&P."