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 2nd at 9 a.m. East.

We're heading into the fourth quarter of what's been a year of rising trade tensions between

the US and China, and on the calendar there's plenty of events to watch.

There's a scheduled negotiation on October 10th and 11th, two scheduled terror factions on October and

December 15th, and the Asia Pacific Economic Cooperation Conference in November, a forum where the presidents of both the US and China could, like prior forums, need to discuss trade.

That's plenty to tell us whether de-escalation is possible, or if we're going to continue the tensions that have

touched off the cycle of sagging corporate confidence, falling cap-backs, and labor weakness that our economists think is in motion.

Here's how we're thinking about these events. It's all about whether or not a durable

pause in trade escalation can be achieved. There's been no recognition publicly that

there's been progress on the core issues keeping each side from making a trade

agreement.

This includes issues of intellectual property and how to enforce an agreement.

Hence, even if the two sides can once again make an agreement to forego further tariff increases,

a pause in escalation, we would view that pause as fleeting,

much like the prior three pauses we have seen since this negotiation began in earnest in early

2018.

But before things break down, we think you'll see one more pause this quarter, with the

November Asia Pacific Conference as the best opportunity, given the potential for both Presidents

to be in the same place.

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