Long-time bull Art Hogan suggests Larry Kudlow in White House may help prevent a trade war

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.

Larry Kudlow
Scott Mlyn | CNBC
Larry Kudlow

"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 S&P 500 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."

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect