This is almost another Y2K scenario. The media have gone overboard on pitching the end-is-near on the China trade war, but so far, so good. The U.S. market is up, China's market is down. The immediate effects of trade tariffs and even trade-war rhetoric have been limited.
If the editorial board over at the WSJ and the FT and The Economist are right, then all this ends badly for both sides. If they are wrong, a better trade arrangement is worked out before it all goes to hell in a handbasket.
Barclays Capital said yesterday that global growth, fiscal and monetary policy in the core economies is beating out a trade war for the time being. Investors are not taking the long view on this trade fight just yet.
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