Mohamed El-Erian: Don't underestimate the possibility of a 'Reagan moment' for Trump on China
El-Erian has handicapped three scenarios, listing the chances of a "short-term" trade deal between the U.S. and China at 65%, a "Reagan moment" at 15%, and a full-blown trade war at 20%.
"I think what you're seeing is the status quo is coming down. And the possibility of the other two are going up," he said. "If the U.S. goes full-blown with this as about national security, it can actually change the economic dynamics on a global scale. It really can." No matter the resolution, it won't come quickly, and Wall Street is going to have to deal with the uncertainty in the meantime, he added.
However, El-Erian said the U.S. stock market is better positioned to weather the trade storm than are Chinese equities.absolute terms we suffer. But we win relative to others, " he said. "I think the markets have understood that the U.S. is in a better place than the rest of the world."
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