Welcome to Thoughts on the Market.

I'm Michael Zezis, Head of Public Policy Research 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, March 24 at 11 a.m. in New York.

Last week, a meeting between the U.S. and China laid bare economic tensions between

the countries.

The public part of such meetings are usually marked by statements of goodwill and commitment

to cooperation, regardless of private concerns.

Yet this meeting stood out for the frank statements of both sides on their grievances with

the other.

For investors, this should dispel any notion that the transition from the Trump administration

to the Biden administration would usher in a more conciliatory approach to China in a

quick path to trade barrier reduction.

A harmonious economic relationship between the two countries could be in the future, but

not without some tough choices beforehand.

So there's value in being aware of how this transition plays out, as it creates headwinds

for some key equity sectors and opportunities in others.

On the negative side, we think the U.S. is likely to continue raising non-tariff barriers.

That could include export restriction controls reaching into new industries, as emerging technologies

around, for example, artificial intelligence and advanced batteries become more common.

The return this creates the most risk for the semiconductor industry in greater China

...