In today’s Macroeconomic Briefing we look at how the latest developments in the US-China trade tensions are playing out in the global equity markets. There’s always the danger of reading too much into the short-term noise created by President Trump’s tweets, and then the usual ”smoothing over” of these by officials, and some analysts argue that a combination of benign intermediate and long-term sentiment readings and positive price and fundamental momentum remains bullish for the equity market. Others argue that the more immediate signal that equities are treating more seriously is Fed policy expectations, and as rate cut expectations firm up, then that should underpin the market and suppress volatility. At the same time, there’s also the narrative, largely related to inflation (raising the inflation target), and that the Fed is prepared to run the US economy ‘hot’. Absolute Strategy Research say this could boost real wages and labour’s share of income, which could squeeze smaller firms, which are already complaining about rising labour costs. This could, in the medium term, increase credit risks. We also highlight research on Europe’s improving economic fundamentals. SG make some recommendations on how investors should position for the upturn, while SouthBay Research say their indicators point to a bottoming process, but not an upturn.