When you look at the trade war between U.S. and the rest of the world, especially China, the most important question is how it is going to be resolved.

Games end with two different ways: cooperative and incooperative. As long as Trump in office, there is lack of the basis of cooperation, namely trust. Can any american trust a contract signed by Trump? Of course not, neither China. So 99.99999…% of chance is the coming trade deal is no deal.

The direct repercussion to the market is clear. The forces of growth have to come from Federal reserve and domestic business growth. Fed will be losing real stimulus power once interest rate hits near zero which will very likely happen next year. Business engine is deteriorating because of two reasons. First, the last few years of investment in revolutionary technology, deep learning, has not lead a real new revolution. In other words, a new industry has not been create since the demands is yet to be discovered. In the meantime, american customers are not getting richer due to the trade war wage growth stagnation.

Update on 9/21, here is a much more in-depth analysis, by Martin Ji, on why China is not going to surrender under Trump’s bully strategy which worked well on Mexico.