Global equity markets are higher, following the stunning recovery in the US yesterday, where the S&P 500 rallied 76 points or 3% from its lows to it highs, near where it finished. The outside up day is seeing following through today. Without China and Hong Kong, which are on holiday, the MSCI Asia Pacific Index snapped a three-day down draft and closed 0.55% higher. The Nikkei led the region with a 1.5% gain, led by real estate, health care and financials. It posted its highest close since in two weeks.    

Gains in Europe have been stronger. The Dow Jones Stoxx 600 is up 1.5% in late morning turnover.It is led by information technology and materials (both sectors are up more than 2%).Real estate is the laggard, up 0.65%. While the Asia Pacific Index is well below its 20-day moving average, the Stoxx 600 is straddling its.  

There is a 60-day period between the announcements and when the US tariffs will be implemented. China has not indicated when it will enforce its tariffs. This is understood to allow room to negotiate here in Q2. Also, this is seen as compatible with the Trump Administration’s bold rhetoric and climb down in practice. Consider the recent flip on NAFTA–from threatening to leave it to seek an agreement in principle next week.As part of the effort, the US appears to have softened its demands on the controversial domestic content requirement for autos (presently 62.5%, and the US had sought 85%).  

From camps that have been critical of China, about its holdings of US Treasuries, large debt accumulated since 2008, currency practices, etc., bellicose language is still fanning the flames. This war camp worries that one-way China could retaliate is to allow its currency to depreciate. Sure, it could, but over the last few months there is only one major country that stood accused of talking its currency down. In fact, it was so disturbing that it raised addressed at ECB press conference, and was subsequently, walked back by the US President and the Treasury Secretary.  

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