Do both sides needs some pain first?
The conditions might not be right for the US and China to make a trade deal, Morgan Stanley argues in a note today.
They highlight that when Trump called Xi to resume trade talks in December, it came after a 20% drop in US equities. They also note that Chinese economic data has picked with retail sales notably strong.
“US and Chinese data strength may make both sides believe that there is no need yet to soften their negotiation position,” they write.
Yesterday Trump said that he could impose more tariffs on China if he wants. The market took that as a negative signal and equities are further slumping today, with the S&P 500 down 12 points.