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Pence, Xi Showdown Crushes Hopes For Trade War De-escalation

•, By Tyler Durden

For two consecutive days US stocks surged on renewed hopes that trade tensions between the US and China may be thawing ahead of the upcoming G-20 meeting between presidents Trump and Xi, when first an FT suggested that USTR Lighthizer had said no further tariff raises would be forthcoming (the report has since been denied), and subsequently when Trump himself told reporters on Friday he may not impose more tariffs after China sent the United States a list of measures it was willing to take to resolve trade tensions.

Unfortunately for markets, and bulls such as JPM's Marko Kolanovic who saw last week's traces of trade de-escalation as a reason to quadruple-down on his recommendation to buy stocksany hopes of an imminent trade war end or even ceasefire came crashing down overnight when Vice President Mike Pence traded sharp barbs with Chinese leader Xi Jinping in back-to-back speeches at the Asia Pacific Economic Co-operation (APEC) summit in Papua New Guinea, which confirmed yet again that neither country is willing to compromise in the escalating trade war.

Xi received applause Saturday when he told the Asia-Pacific Economic Cooperation summit in Papua New Guinea that implementing tariffs and breaking up supply chains was "short-sighted" and "doomed to failure." According to Bloomberg, Xi called for a stronger World Trade Organization and defended his signature Belt-and-Road Initiative, saying it's "not a trap as some people have labeled it."

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