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"Once the dust settles, we will realize that this is not a fundamental advance, but that the conflict will continue. Take profits very quickly, which would be my sense. "
That's Stephen Roach, senior researcher at Yale University and former Morgan Stanley
MRS, + 0.77%
Asia, the president of the CNBC, spoke this week of CNBC's "trading nation" about the benefits of a trade deal between the United States and China.
Critic of the White House's tariff strategy, Roach said he did not see a resolution with a significant impact on trade between the two countries. While China would likely accept multi-year purchases for agriculture, soybean and energy, it is not convinced that this will be enough to satisfy investors.
"The bulk of the progress will be bilateral trade, which I find the least attractive as an economist because it reflects our own macroeconomic imbalances," Roach said. "If we can squeeze the Chinese coin, it will only send it to another, more expensive producer. So it's at best a cosmetic affair. But it's a market and it's better than nothing.
Tariffs are not the cause of China's economic problems, he said, adding that he thought the country's officials were injecting enough fiscal stimulus to cope with the slowdown. Thus, even if Roach sees the conclusion of an agreement next month, it will not be because China will judge it necessary.
"I do not think they're in a desperate situation," he said. "The downward pressures are transient; they will be able to stabilize and then show a gradual improvement. "
Watch the interview:
Few sales Thursday, with the Dow
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Nasdaq
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and S & P
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bouncing mainly around the breakeven point.
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