Welcome to Thoughts on the Market. I'm Michael Zezes, Head of Public Policy and Municipal Strategy for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives, I'll be talking about the intersection between US public policy and

financial markets. It's Wednesday October 23rd at 9 a.m. Eastern. Both the US and China

keep saying the right things about their trade talks. They say they're productive, that they're advancing. We have to admit

that for the moment things seem less tense. But is that enough to reverse the slowing in the

economy that's taken hold? That's the question our economists have been looking at in detail.

The short answer is, not yet. That's the question our economists have been looking at in detail.

The short answer is, not yet.

If you've been listening to this podcast, you probably recall that our economists have been concerned

that trade policy risks had touched off a cycle of declining corporate confidence, declining

capex, and a decline in demand for labor. The data has borne out in recent months

that this cycle is in motion, with cappex grinding to a halt in mid-2018

when trade tension started, after undergoing a halt in mid-2018 when trade tensions started after undergoing a

renaissance in 2017 and 2018. So stopping this cycle takes time. In our

economist view, global economic recovery could start in the first quarter of next year if in the coming weeks

the negotiations reveal that the US and China have made substantive progress making this

pause a durable one and consumer strength continues into the fourth quarter.

If instead the current pause appears flimsy,

with little negotiating progress made ahead of a planned November meeting,

it could take longer.

And if December 15th tariffs go into place, likely the result of a breakdown of negotiations,

then it will be difficult for a growth rebound to come into sight,

...