Sunday’s announcement that the US and China will sharply reduce tariffs and continue to negotiate sparked a monster rally in equities around the world. The assumption is that progress on trade talks reduces recession risk, here and abroad. US stocks, however, remain the odd man out vs. the rest of the major asset classes year to date, although American shares have recovered most of their recent losses.

Continue reading →

The tariff truce between the US and China dials down recession risk, or so it appears, based on the sharp rise in global equity markets on Monday. Economists also note that the 90-day pause announced on Sunday is a plus for sidestepping recession. “More de-escalation and progress on deals within the 90-day relief period are helping markets to buy time on the recession endgame,” analysts at Barclays wrote ahead of the US-China announcement. Mark Williams, at Capital Economics, advised: “The new status quo isn’t too far from our baseline assumption for tariffs [of] 10% for most countries [and] 60% for China, which underpins our view that the US economy will avoid recession.”

Continue reading →