U.S. equity markets could tumble by up to 10 percent if investor hopes for corporation-friendly reform fail to translate into legislation, according to Blackstone Group Vice Chairman John Studzinski.
The veteran financier, who joined Blackstone in 2006, advised watching President Donald Trump’s progress in getting approval for his key platform initiatives from U.S. Senators between now and the summer recess during which Congress closes for the month of August.
“We’ll have a better indication by the August recess whether he’s going to actually accomplish something or not,” Studzinski told CNBC’s Squawk Box on Monday.
“If by the middle of August nothing happens – and I doubt it will – then you’ll see the stock market react with even greater caution than it has now,” he added.
As the debate continues to rage over whether valuations for U.S. equities have overshot, Studzinski says it is important to watch the level of investor uncertainty around legislative changes given the potential for a “major re-rating” of shares should it develop.
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