Morgan Stanley: A “Vicious Cycle” Has Emerged And Will Only End When Stocks Dive
by Tyler Durden
ZeroHedge.com
Mon, 07/02/2018
While many had considered that Trump’s ever more bitter trade war tirades and rhetoric were just that, at best a negotiating tool as nobody could conceive the US president actively pursuing measures that could potentially threaten the US economy and stock market, over the past month it has dawned on most that in this case, Trump is not bluffing.
In fact, as Morgan Stanley’s chief US public policy strategist writes in the firm’s Sunday Start note, “we no longer doubt that the US administration’s proposals signal the direction of trade policy. An escalatory cycle of protectionist actions, not just rhetoric, has begun and will continue.”
In addressing Trump’s unexpectedly stark retaliations, observed in the presidents engagement with China, the EU and Nafta nations, Zezas also notes that “this pattern of behavior shouldn’t be ignored: the US and its key economic partners now view trade differently. One party’s in-kind response is the other’s escalation. This is what a vicious cycle looks like.”
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