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 U.S. public policy and financial markets.

It's Wednesday, October 9th at 9 a.m. Eastern.

As we previewed in our last podcast, this is a big week for the US-China trade negotiations.

Negotiators meet this week and markets are hopeful for some type of breakthrough that could lead

to what we call a durable pause.

That's an agreement that would credibly keep both sides from further escalation for a long period.

In our view, that's important to interrupting the cycle of sagging corporate confidence,

falling capital spending, and labor weakness that our economists think is in motion.

Listeners are likely well aware of our skepticism about this possibility,

so let's focus on what might make us think differently and what would suggest a more durable

pause and a more bullish path for risk assets is in the cards.

The most important variable is not whether a pause in tariffs is announced.

Rather, it's whether or not the pause is accompanied by a rollback and the tariffs put in place

this past September.

That could be sufficient to suggest a meaningful

compromise have been made by one side or the other. We've been thinking that this is

unlikely because the incentives for either side to compromise have not been

sufficiently boosted by either economic weakness,

market weakness, or political risk.

Said more simply, we don't think there's been enough of any of those to cause either

side to soften its demands.

...