The G20 meeting happens later this week and virtually all that matters this go-round is the Trump/Xi summit.

Clearly, Trump pushed too hard against a China that early-on seemed desperate to give all but the farm to end the trade war. 

China now seems to have abandoned the notion that it can placate Trump into a deal that doesn’t force too much structural or ideological sacrifice. In fact, as it stands, the ultimate agreement is likely not to be nearly as U.S.-friendly (by Trump’s standards) as was the one they came close to inking a few weeks ago.

As for the equity market, the next couple of weeks is a tough call: At the moment, the best the bulls can hope for is a commitment from Trump not to escalate by imposing tariffs on a proposed additional $300 billion of Chinese imports and an announcement that serious negotiations are restarting right away. The fact that stocks are at all time highs suggests that traders are okay with that outcome for the moment; clearly the Fed’s newfound dovishness helps the short-term situation markedly.

Beyond the short-term, however, the existing tariffs – along with the palpable uncertainty inspired by a U.S. that has subverted its own global leadership in favor of a shockingly nationalist stance – are doing a real number on conditions. While, again, the market may hold awhile near these levels, if Trump believes that a deal can wait for the 2020 election, waning conditions, and, ultimately, declining stock prices will convince him otherwise. I suspect, in terms of stock prices, the convincing will come sometime in Q3.