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, February 17th at 11 a.m. in New York.

President Biden made his first visit to a federal agency last week, the U.S. State Department.

It's a symbol that the President views foreign policy as a priority.

It also reminds investors that geopolitical issues can and will be influential on markets,

particularly in the case of the U.S.-China relationship.

Concerns about this relationship dominated an investor thinking in 2018 and 2019, as

tariff and other trade barriers were erected leading to global growth concerns.

Biden's mention in the speech of China as a chief global competitor reminds investors

to remain cognizant of how that relationship continues to evolve.

The good news for markets, which tend to dislike uncertainty and surprises, is that the

Biden administration is flagging a more deliberate approach to engagement with China.

The administration has stated an intent to tighten relationships with allies and boost

domestic investment as a way of enhancing leverage beyond trade barriers.

That means a lot of conversations with foreign governments and some legislation domestically,

said differently, it's going to take some time.

That suggests another increase in U.S.-China tension should not be in the immediate

risk to the U.S. economic outlook.

But investors also shouldn't risk easy.

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