Citizens Financial CEO: Tariffs are the market "wild card"
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Stocks keep grinding higher and Wall Street remains sanguine about policy risks, yet the grounds-eye view of the economy from a big regional lender is more cautious. Tariffs, the CEO of Citizen Financial tells Axios, still have the potential to trigger an economic slowdown.
Why it matters: While ignoring tariffs has been a critical part of the bull market formula, the bank's CEO, Bruce Van Saun, warns investors to check their "unbridled enthusiasm."
What they're saying: "The one thing that's still the wild card really is the tariffs," he says in an interview with Axios, adding that "the biggest risk for a bank is always the external environment, the macro."
- "Unbridled enthusiasm for tariffs" could cause "more of a slowdown" if the levies creep up to what Van Saun calls "worst-case scenario" levels.
Catch up quick: The sweeping global tariffs announced by President Trump in early April initially spooked investors, with the S&P 500 hitting an intraday bear market.
- The back and forth on tariffs since has left investors fairly numb to any news about them. That could be a concern if the levies do eventually cause an economic slowdown once their effect is fully realized.
Zoom in: Companies have been having "pretty good years," Van Saun says. Still, uncertainty around the tariffs is holding back "what should be an even better environment given some of the other policies."
- Reduced regulation has led to a more "pro-business orientation," he says, adding regulators are coming to him to ask what headwinds are getting in his way for the first time in his career.
- The tax bill also "avoided a train wreck" by continuing 2017 tax cuts.
Yes, but: While tariff risks remain, Van Saun added that "the good news is companies are pretty adaptable and resilient."
- This echoes what many strategists have been banking on: corporations that can withstand policy risk to eke out continued earnings growth.
Friction point: Immigration policy is another concern for Van Saun.
- "It's good to clamp down on illegal immigration," he says.
- But he adds, " a lot of the immigrants who come to this country have actually been very positive economic contributors."
- The current approach to immigration "could cause some things to slow down," he says.
What we're watching: Citizens Financial's stock has rallied 29% over the past 12 months, significantly ahead of U.S. Bancorp, PNC and other regional banking peers.
- The outperformance follows the company's earnings growth, which could be a signal that Van Saun's focus on expansion in wealth, private banking and across new regions is paying off for shareholders.
