The markets do not seem be overly concerned about the trade war. Partly because they are confident that the Fed will step in if Beijing and Washington end up in an all-out trade war. Do the markets underestimate the effects of the trade war and do they overestimate the Fed’s firepower and willingness?
Debts are at record levels whereas the room for monetary and fiscal stimulus is limited in many countries. Political risks are on the rise across the board. Are we headed for the fifth global recession in six decades with as triggers the US-Chinese trade war, geopolitical clashes, and Brexit?