‘When the dust settles, there will be some realization that this is not a fundamental breakthrough — that the conflict will be enduring. Take profits very quickly, which would be my sense.’ That’s Stephen Roach, Yale University senior fellow and former Morgan Stanley MS, +1.04% Asia chairman, talking on CNBC’s “Trading Nation” this week about the fallout from a U.S.-China trade deal.
“The bulk of the progress will be on the bilateral trade front, which, quite frankly, as an economist I find the least appealing because that’s really a reflection of our own macroeconomic imbalances,” Roach said. “If we can squeeze the Chinese piece, that’ll just send those goods to another higher cost producer. So this is sort of a cosmetic deal, at best. But it’s a deal, and it’s better than nothing.
“I don’t think they’re in desperate shape,” he said. “The downside pressures are transitory; they’ll be able to stabilize and then show some gradual improvement.” Not much selling going on Thursday, with the Dow DJIA, +0.28% Nasdaq COMP, +0.28% and S&P SPX, +0.27% mostly bouncing around breakeven.
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