Futures Now

With the tariffs in effect, here's what Invesco says investors should be watching

Invesco: Trade war could be a 'slow-motion accident' waiting to happen

Investors should be looking to the Fed for a short-term reprieve against the latest round of U.S. tariffs on Chinese goods, Invesco's Kristina Hooper says.  

While the firm's chief global market strategist says trade war headlines will act as a "slow bleed for consumers" if President Donald Trump and Chinese President Xi Jinping don't resolve their trade dispute, Hooper believes the Fed could save the markets for the time being.

"I think the focus should be on the Fed and certainly what's already happening with the Fed," she said Thursday on CNBC's "Futures Now." "That more accommodative stance certainly provides something of a balance to stocks."

But Hooper also warns that in the long term, the Fed isn't the big fix investors should be looking for, especially if trade headlines continue to dominate.

"We certainly have the Fed as a positive, but it's a positive for the markets, it's not a positive necessarily for the economy," she added. "As Jay Powell said in his Jackson Hole speech last [month], the Fed really doesn't have the cure for what ails the economy, which is really the trade war."

Another bright spot, however, could be that the inverted yield curve may not be as much of a threat as investors believe it to be. According to Hooper, "there are a lot of differences this time around" from when the yield curve last inverted in 2009.

"For example, we have quantitative easing and that may have distorted Treasury markets," she said. "We also have the fact that the Fed is actually cutting rates as opposed to raising rates. That's a very unusual environment in which to see an inverted yield curve and could suggest, again, that it's not as predictive."

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