{"id":18287,"date":"2019-05-29T01:24:57","date_gmt":"2019-05-29T01:24:57","guid":{"rendered":"http:\/\/thepatientinvestor.com\/?p=18287"},"modified":"2019-05-29T01:25:36","modified_gmt":"2019-05-29T01:25:36","slug":"market-uncertainty-is-likely-to-persist-as-u-s-china-negations-stall-bob-doll","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2019\/05\/29\/market-uncertainty-is-likely-to-persist-as-u-s-china-negations-stall-bob-doll\/","title":{"rendered":"Market uncertainty is likely to persist as US-China negotiations stall | Bob Doll"},"content":{"rendered":"

From Bob Doll at Nuveen<\/a>:<\/p>\n

“There have been several risk-off phases this decade, triggered by economic threats due to politically induced setbacks. However, the current sluggish global economy and weak trade, coupled with escalating trade tariffs and non-tariff barriers, is a worrisome combination. This is especially true because once protectionism has gained momentum, it may prove difficult to stop or reverse. While many risk asset prices are only off modestly from April highs, there\u2019s an ominous undercurrent in global financial markets.<\/p>\n

We have assumed that the pro-growth bias of both the U.S. and China would lead to a trade truce. That premise looks increasingly questionable, although a deal is always possible. Given that financial markets have not reacted more significantly, investors are still generally expecting the global economic expansion to persist.<\/p>\n

Despite the longer-term power struggle, the constructive case for a trade deal between the U. S. and China was predicated on President Trump focusing on the short-term win, while the Chinese look to the longer-term. This difference in political time horizons made a deal possible. Now, the focus for both parties has shifted to long-term strategic objectives, resulting in a stalemate. A financial market downturn may be needed to break the impasse. An extended period of churning could develop if trade talks resume, but without signs of a resolution.<\/p>\n

The current market weakness differs from prior periods of economic uncertainty during this decade. There has always been a path to a positive outcome for growth and risk assets, primarily via additional policy stimulus. However, the economic and market outcome this time has become more uncertain, and time will not work towards a positive outcome unless trade negotiations improve. Business sentiment will erode if mounting trade roadblocks and uncertainty do not diminish. Protectionism tops the list of recession catalysts, and a permanent deterioration in U.S.\/China trade relations could have adverse long-term revenue ramifications for global trade and growth.”<\/p><\/blockquote>\n

My thoughts:<\/p>\n