Will Martin

A widely respected economist who predicted the rise of Donald Trump as early as 2011 believes that by the time Trump's time in the White House is over, the face of American capitalism may be fundamentally altered forever.

Speaking to Business Insider in October, Luigi Zingales — a professor of entrepreneurship and finance at Chicago Booth Business School, whose work focuses on crony capitalism — said that Trump's willingness to appoint friends and allies to positions of power, particularly in the judiciary, has the potential to entirely shift how American politics functions.

Zingales, an Italian, has frequently compared Trump to four-time Italian Prime Minister Silvio Berlusconi, says what is likely to happen if Trump continues along that path is similar to what occurs in his native land — politicians of all stripes trying to influence people in positions that are meant to be free from political interference like judges and central bank governors.

In Italy, Zingales says, the probability senior members of the judiciary being leaned on by politicians prior to making important rulings is "100%."

In the USA, such attempts would be considered highly unusual, but President Trump's outspoken criticism of both the Mueller probe and <a id="6dcaddc7-385d-3401-a8b8-d0d69a8cd5c5" href="https://www.businessinsider.com/trump-federal-reserve-interest-rate-attacks-echo-nixon-disaster-2018-8?utm_source=intl&amp;utm_medium=ingest"> the activities of the Federal Reserve under Chairman Jerome Powell </a> is beginning to normalize such behaviour.

Read more: An alarming slowdown in global trade shows Trump's tariff war is having a devastating impact

"If I expect that the other side is going to try to get to the judge [and influence his decision], I will also try to get to the judge," he said.

If it were to become truly normal, Zingales said, that would be very difficult to reverse. What could happen, Zingales said, is much like people standing in line waiting for a bus.

"It's like when everyone waits in line to get the bus, or the ski lift, or to go to the office. As long as everybody is in line, you don't like it, but you join the line as well.

"If one person deviates, you yell at him. If two deviate, you yell at them. If three deviate, you join them. At some point, if everybody goes, you can't be the only idiot still waiting in line."

Whether such institutionalized changes to the workings of American politics stick will depend, Zingales said, on how long Trump is president.

"What remains to be seen is to what extent this can be seen as an aberration, and then the world returns to a normal situation moving forward, or to what extent this is a permanent shift in the way politics is run in the United States, and the way people perceive it," he said.

The impact of such changes is likely to be much more long-lasting if Trump is reelected in 2020, and serves a full eight years in the White House.

"The negative impact is very dependent on this," he said. "My suspicion is that once people develop a reputation, it's very hard to go back."

"Once you shift the game, changing back ain't easy," he added.

Zingales' words are particularly powerful given that in 2011, he wrote a book in which he predicted that Trump, or someone very similar could end up as president. The chapter focusing on that possibly was never published after Zingales showed the book to a colleague.

"One of my colleagues who was kind of enough to read the first version told me that I was crazy, that I would lose credibility to the book if I were to keep that in," <a id="efe81ccb-1ddc-3df3-a5ca-d96265d96011" href="https://www.businessinsider.com/luigi-zingales-economist-silvio-berlusconi-donald-trump-2017-9?utm_source=intl&amp;utm_medium=ingest"> he said in a 2017 interview with Business Insider. </a>

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An economist who predicted Trump's rise as early as 2011 explains how he's changing the face of American capitalism forever

Senior officials for the Venezuelan government have reportedly travelled to London for crunch talks with the Bank of England as they seek to repatriate more than $500 million of gold back to Caracas.

The government of Venezuelan President Nicolas Maduro <a href="https://www.businessinsider.com/venezuela-asks-bank-of-england-to-return-550-million-of-gold-2018-11?r=UK&amp;IR=T?utm_source=intl&amp;utm_medium=ingest" id="73e83334-cf7c-3fb4-a459-371d4b285e56"> in early November </a> approached the Bank of England about removing roughly 16.5 tons of gold — worth in the region of $550 million — from the central bank's vaults and returning it to South America. Emerging market nations frequently store gold reserves in foreign central banks.

At the time the request was first reported, Reuters said that the Bank of England had "sought to clarify" Venezuela's intentions in taking back its gold. It now appears that officials, including Venezuelan finance minister Simon Zerpa, and central bank governor Calixto Ortega Sanchez, have come to London to provide further clarity, <a href="https://www.reuters.com/article/us-venezuela-gold/venezuela-officials-seek-meeting-with-bank-of-england-over-gold-repatriation-sources-idUSKBN1O51II" id="34e9b033-ebe2-3e15-a336-222d455c69e0"> according to Reuters. </a>

<a href="http://www.cityam.com/270303/bank-england-slammed-over-secret-venezuelan-gold-summit" id="7cff4c26-8a94-369e-ad66-f59652440a18"> City AM reports </a> that Bank of England Deputy Governor Dave Ramsden will attend a meeting with the officials, but that it is unclear if Governor Mark Carney will be in attendance. Reuters reported that it was "not immediately evident" if any meeting would actually take place.

The Bank of England declined to comment.

Read more: Venezuela's inflation rate just hit 830,000% — and is likely to keep rising

The expected meeting has drawn criticism from British politicians, with Conservative MP reportedly writing to Carney and Chancellor of the Exchequer Philip Hammond, asking the pair to call off any contact with Venezuelan officials.

"Were such a meeting to take place it would pose a significant reputational risk to the Bank and may be in violation of US Treasury-imposed sanctions," Lewer wrote in a letter, reported by City AM.

Venezuela has in recent years been a major seller of gold, and this year alone it has <a href="https://www.reuters.com/article/us-usa-venezuela-bolton/trump-increases-pressure-on-venezuela-with-sanctions-on-gold-idUSKCN1N65P6" id="1fcd6839-04c4-30f4-a551-007572ef3506"> sold about 26 tons, worth close to $900 million, to Turkey </a> . In the past four years, Venezuela's gold reserves have decreased to about 175 tons from about 400 tons, Reuters reported, citing statistics from the country's central bank.

Venezuela has been selling its sizeable gold reserves, built up under Hugo Chavez, to try to address the economic crisis plaguing the country. Hyperinflation of goods means everyday items are unaffordable for many Venezuelans, and poverty and violence are widespread.

Most recently, its drive to repatriate gold has been related to sanctions announced by the US aimed at disrupting the South American country's gold exports.

President Donald Trump in November signed an executive order to bar US persons from dealing with entities and people involved with "corrupt or deceptive" gold sales from Venezuela.

A report from the International Monetary Fund in July said Venezuela's economy was <a href="https://www.businessinsider.com/ap-imf-venezuelas-inflation-on-track-to-top-1-million-percent-2018-7?utm_source=intl&amp;utm_medium=ingest" id="088dcebc-cc3a-3190-a78f-df1001c9a8a2"> expected to contract by about 18% </a> this year, while inflation was forecast to reach a whopping 1 million percent.

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SEE ALSO: Venezuela really wants its $550 million worth of gold back from the Bank of England

Venezuela is coming to get its $550 million of gold at the Bank of England

A rising of tide of City of London analysts now see an increased likelihood of the UK deciding not to leave the European Union after all, and simply cancelling Brexit.

JPMorgan's Malcolm Barr now puts the odds of scrapping Brexit at 40%, a sharp spike from 20% odds he had previously put on the scenario. Japanese banking giant Nomura now also sees more probability of the UK staying in the EU, it now puts odds at 40%.

The outlook has shifted because of an eventful week, where <a id="7e129d59-b4c3-3541-a01b-0b0b2b862ef4" href="https://www.businessinsider.com/theresa-may-should-be-allowed-to-unilaterally-reverse-brexit-says-eu-law-chief-2018-12?utm_source=intl&amp;utm_medium=ingest"> the law chief of Europe's highest court advised that the UK should be able to reverse Brexit. </a> The European Court of Justice on Tuesday <a id="19414abc-c96f-36e6-aa06-2ead63d53a66" href="https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-12/cp180187en.pdf"> proposed </a> that Article 50 — the legal mechanism which kickstarted Brexit — allows the "unilateral revocation" of the UK's intention to withdraw from the EU.

In a note on Wednesday, JPMorgan's Barr cited the European Court of Justice proposal when he shifted the bank's matrix of Brexit outcomes. Previously, the bank's odds of various outcomes went like this: A so-called "no deal" — 20%; orderly Brexit (i.e. Brexit with a deal) — 60%; and staying in the EU — 20%. (They're now at 10%, 50% and 40%, respectively.)

Read more: The UK economy could slump 8% into the worst recession since WWII after a no deal Brexit, Bank of England warns

"One of the issues about a second referendum has, in our view, always been the need for an Article 50 extension and potential EU involvement in the design of that referendum," Barr wrote in the report. "The UK now appears to have the option of revoking unilaterally and taking a period of time of its own choosing to decide what happens next."

Here's more from JPMorgan's note (emphasis ours):

Within the "no Brexit" scenarios, a unilateral revocation on the UK’s part looks more likely to us than a joint UK-EU decision to extend the Article 50 negotiating period and thereby keep the existing clock running. And a second referendum strikes us as rather more likely than a general election to be driving a decision to revoke. Hence, within that 40% "no Brexit" possibility, we see a 25% chance of a revocation to facilitate a second referendum, and a 15% chance that it is to facilitate a general election.

When raising its odds, Nomura cited <a id="4a61ccb4-7793-3d93-a2ea-b3d2a47bb23b" href="https://www.businessinsider.com/mps-vote-for-dominic-grieve-brexit-amendment-2018-12?r=UK&amp;IR=T?utm_source=intl&amp;utm_medium=ingest"> the amendment passed by Parliament on Tuesday, </a> which allows MPs to take control of Brexit if May’s deal is voted down, as expected, next week.

"The probabilities have changed," Nomura wrote on Wednesday, partly because of the amendment. It carries huge political weight and would be very difficult for the government to ignore.

"If the government loses the meaningful vote, then MPs will be able to add, and vote on, amendments instructing the government as to what to do next, Nomura said."Parliament will do what it can to avoid Hard Brexit," it said, and the amendment "makes it easier to do."

Read more: Brexit is now such a headache that the UK is 'uninvestable,' according to one of Wall Street's best respected research houses

To be clear, both JPMorgan and Nomura both continue to see the Brexit outcome with the highest likelihood being the UK leaving on the terms, or very close to the terms, of May's current deal, both placing that probability at 50%.

Betting markets are also swaying towards the UK remaining in the EU, with betting exchange Smarkets saying its customers now see about a 53% chance of the UK not leaving the EU by March next year.

Financial advisory firm deVere Group said people are less certain:"Nothing is currently priced in because of the enormous question marks hanging over the many different outcomes," said Nigel Green, founder and chief executive of deVere.

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The City of London is raising the odds that Brexit won't actually happen

The negative impact of the ongoing trade battle between the US and China is plain to see in new data from Swiss freight giant Kuehne + Nagel.

According to the data, published on Tuesday, global trade was up 0.3% in November compared to the previous month. It's a massive shift from November 2017, when world trade grew 3.1% month-over-month.

Read more: 'A bumpy ride ahead': Here's how Wall Street is reacting to Trump and Xi's trade-war deal

The picture is a bit nuanced. For example, trade overall is up 6.4% from the same point last year, pushing Kuehne + Nagel's World Trade Indicator to 143.7, the highest level since records began. But it's still clear the US-China trade war is having an impact. Going forward, the data shows a consistent downward trend. The chart below illustrates this trajectory over the past 12 months:

Not only is overall global trade growth slowing, but in many areas, it is actively shrinking.

"In ocean freight, measured by the live throughput of ports, the unit volume declined slightly in November," down 0.3% month over month, Kuehne + Nagel said in the release.

On top of that, every single region of the globe saw its foreign trade growth drop in November.

Kuehne + Nagel's data matches what Maersk, the world's largest shipping company, said in November, when <a id="56de8c31-972d-3bef-a1df-e92f8766be65" href="http://uk.businessinsider.com/us-china-trade-war-worlds-largest-shipping-firm-warns-on-tariffs-2018-11?utm_source=intl&amp;utm_medium=ingest"> it published data showing a slowdown in global container trade growth. </a>

Global container trade continued to lose momentum in the third quarter. And so far this year, it has suffered "a much slower pace of growth," rising by 4.2% compared with the 5.8% recorded over the same period in 2017, Maersk said.

Slowing global trade comes against a backdrop in which the US has introduced tariffs of 10% on $250 billion worth of Chinese goods entering the US, prompting Chinese policymakers to retaliate, albeit on a smaller scale.

President Trump has also repeatedly threatened to place tariffs on all US imports from China, an amount totaling more than $500 billion annually.

Relations have thawed a little in the last few days after Trump and his Chinese counterpart, Xi Jinping, <a id="8fd4c572-00d9-3c15-a0d1-af0bcd6eb098" href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12?utm_source=intl&amp;utm_medium=ingest"> came to a tentative truce on trade at the G20 summit in Buenos Aires, Argentina, </a> postponing an increase in tariffs and agreeing to a 90-day window for further discussions.

The US agreed not to raise the 10% tariff rate on $200 billion worth of Chinese goods to 25% on January 1, as originally scheduled, while in return China committed to buying a "very substantial amount" of agricultural, energy, and industrial goods from the US.

The agreement, however, is seen by most commentators as merely a temporary fix, with <a id="e49800cf-1714-3fc9-ae69-3a672796f31b" href="https://www.businessinsider.com/how-wall-street-is-reacting-to-trump-and-xi-trade-war-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> many expecting a further escalation once the three month truce comes to an end. </a>

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SEE ALSO: Trump could cost Europe $75 billion if he follows through with his threat to tax EU car imports

An alarming slowdown in global trade shows Trump's tariff war is having a devastating impact

An escalation of the global trade conflict which saw US President Donald Trump levy increased tariffs on the European automotive sector could knock as much as $75 billion from growth in the eurozone next year, according to analysts at Barclays.

Writing this week, a Barclays team led by Francois Cabau estimated that if Trump were to impose 25% tariffs on the import of European cars into the US, it could knock as much as 0.4 percentage points off growth in the single currency area in 2019. That would equate to around $75 billion of lost output.

Trump has <a id="9d545163-6039-34fe-a028-b78363e8032d" href="https://www.businessinsider.com/trump-tariffs-cars-trucks-autos-from-eu-europe-2018-6?utm_source=intl&amp;utm_medium=ingest"> threatened to impose 25% tariffs </a> on all autos and auto parts coming into the US to extract concessions from trading partners including the European Union and Canada.

He is yet to follow through on such threats, but earlier this month it was reported that <a id="ec045cc4-7eb9-3918-a178-e6e84e3360b3" href="http://uk.businessinsider.com/trump-trade-war-auto-car-tariff-eu-concern-negotiation-tactic-2018-11?utm_source=intl&amp;utm_medium=ingest"> the White House was circulating a report discussing the prospect of auto tariffs, </a> and <a id="d7d44b41-0d32-32c3-ac9d-3debead13de6" href="https://www.businessinsider.com/trump-china-trade-war-xi-jinping-meeting-at-g20-course-2018-11?utm_source=intl&amp;utm_medium=ingest"> with trade set to dominate the agenda at this weekend's G20 conference in Buenos Aires, Argentina, </a> the threat of auto tariffs is set to resurface.

Read more: Trump claims car companies are 'pouring' into the US. The reality is a lot more troubling

"Higher tariffs on EU automobiles have been directly cited and thus remain a serious threat ahead of the G20 meetings," Barclays' team said on Thursday.

"We explore a scenario in which the US increases tariffs on EU passenger cars from 2.5% to 25%."

"We estimate an increase of US tariffs on European cars from the current 2.5% to 25% would result in a drop in euro-area net exports of roughly 2.0%, lowering EA GDP growth about 0.1pp through the direct impact of trade on growth," the note said.

Combining a traditional mechanical analysis, and a Barclays specific value at risk model, the bank estimates that this would subsequently lower estimated growth in the euro area from 1.6% to 1.2% in 2019.

Such a fall in GDP growth, Barclays' team says, could force the European Central Bank into a "policy response."

Although it doesn't specify what form of response, it would likely come in the form of either the restarting of quantitative easing — which is set to come to an end at the end of December — or a further cut in interest rates, below their current level of -0.4%.

Barclays' team was keen to stress that a 0.4 percentage point drop in GDP growth is not its base case, but added that the "potential ramifications are serious enough to warrant a deep exploration of the issue."

It added however, that the initial 0.4 percentage point estimate could increase "as the US-China trade dispute escalates, putting further stress on the Chinese economy, and rippling into Europe."

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Trump could cost Europe $75 billion if he follows through with his threat to tax EU car imports

<a id="2c0b9ff6-8759-3375-a4b5-4056ae1bb775" href="https://markets.businessinsider.com/stocks?utm_source=intl&amp;utm_medium=ingest"> Global markets </a> were ripping higher Monday morning as investors cheered a thawing of trade relations between the US and China over the weekend.

President Donald Trump and his Chinese counterpart, Xi Jinping, <a id="8fd4c572-00d9-3c15-a0d1-af0bcd6eb098" href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12?utm_source=intl&amp;utm_medium=ingest"> came to a tentative truce on trade at the G20 summit in Buenos Aires, Argentina, </a> postponing an increase in tariffs and agreeing to a 90-day window for further discussions.

While the meeting didn't exactly provide an end to the trade war, the agreement represents a forward step in relations.

By the close of trading in Asia, all major Chinese indexes were higher by more than 2.5%, with the Shenzhen Composite index climbing furthest, ending the day 3.3% in the green.

Read more: <a id="40c2ee14-eaae-39fd-a4d5-060e599af8ef" href="http://www.businessinsider.com/trump-tweet-on-china-tariffs-on-us-cars-after-xi-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> Trump says China will 'reduce and remove tariffs' on car imports from the US </a>

Stocks also surged in Europe, with most indexes higher by more than 2% just under 30 minutes after markets opened.

Futures markets were pointing to a strong day in North America, with the Nasdaq index set to open higher by as much as 2.7% and both the S&amp;P 500 and the Dow Jones Industrial Average looking likely to gain at least 2%.

Here's are some of the <a id="7e6f1032-e8e5-3eaa-ab8d-e7c5c51a017a" href="https://markets.businessinsider.com/stocks?utm_source=intl&amp;utm_medium=ingest"> stock market highlights from across the world </a> :

<ul><li> Shanghai Composite — up 2.6% </li><li> Hong Kong's Hang Seng — up 2.5% </li><li> Japan's Nikkei 225 — up 1% </li><li> Britain's FTSE 100 — up 2.2% </li><li> Germany's DAX — up 2.7% </li><li> US futures pointed to the Nasdaq gaining 2.7%, with the S&amp;P 500 and the Dow looking set to open 2% higher. </li><li> Brent crude oil — up 4.7% to $62.27 a barrel </li></ul>

Elsewhere in markets, <a id="db6e626e-2a09-378f-a731-d4e3737aa871" href="https://markets.businessinsider.com/commodities?utm_source=intl&amp;utm_medium=ingest"> oil prices </a> were ripping higher, helped by news of the deal as well as news that Saudi Arabia and Russia extended their agreement to manage the market. Canada's largest producing province also ordered unprecedented output curbs. OPEC, along with Russia, is expected to announce supply cuts at its meeting on Thursday.

Oil markets shrugged off news on Monday morning that Qatar planned to withdraw from OPEC effective January 1 amid increasing political tensions with its Middle Eastern neighbors.

Analysts urged against overexcitement, however, with most noting that the US-China trade agreement was, at best, a temporary reprieve and did not remove any of the tariffs already in place.

"While bulls seem to be well in control for now, investors need to know that what was achieved is only a short-term relief to markets," Hussein Sayed, the chief market strategist at FXTM, said in an email.

"Whether this will be translated into longer-term advances depends on the path of negotiations over the next three months. For now, one obstacle has been removed, but all longer-term risks remain there."

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SEE ALSO: Lost jobs, shrinking growth, and rotting crops — here are the ways Trump's trade war is hurting America

Global markets are ripping higher after Trump and Xi's trade-war agreement

Presidents Trump and Xi <a id="8fd4c572-00d9-3c15-a0d1-af0bcd6eb098" href="https://www.businessinsider.com/trump-china-trade-war-tariffs-90-days-2018-12?utm_source=intl&amp;utm_medium=ingest"> came to a tentative truce on trade at the G20 summit in Buenos Aires, Argentina, </a> postponing the next round of tariffs and agreeing to a 90-day window for further discussions.

This means that the US will not raise the 10% tariff rate on $200 billion worth of Chinese goods to 25% on January 1, as originally scheduled, while in return China has committed to buying a "very substantial amount of agricultural, energy, (and) industrial" goods from the US.

Expectations going into the summit were low, with many commentators saying that the meeting could actually make trade relations between the two nations even worse. <a id="87d761a1-4866-3d36-a124-5bb26d5b5e38" href="https://www.businessinsider.com/trump-china-trade-war-global-stock-markets-surge-on-tentative-deal-2018-12?utm_source=intl&amp;utm_medium=ingest"> The positive nature of the talks has seen markets surge on Monday, </a> most likely in relief than anything else.

But what are analysts saying about the agreement? Business Insider took a look at notes released by major research houses, investment banks, and asset managers since the deal was struck on Saturday evening. Check out 10 of the best below.

<h1> "A bumpy ride ahead": Li-Gang Liu, economist at Citi </h1>

"The result is better than the market expected, but the huge divide remaining continues to suggest a bumpy ride ahead," Liu said.

"Comparing the official statements, we find that the US stresses more on China’s structural reform issues on forced technology transfer, IP protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, while China continues to highlight its willingness to increase imports from the US to reduce the trade imbalance as well as open its markets wider for foreign participation."

<h1> "Should provide investors some relief": John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management </h1>

"The effects of a truce period should provide investors some relief near term from the day-to-day concerns that have roiled the markets on the risk of a protracted trade war and the damage it could cause to global economic growth and corporate earnings over the course of the next year.

"The hope is that both sides will make good use of the truce period to find resolution to the trade dispute and remove the negative overhang that has held international equity market performance hostage since the summer."

<h1> "Rough patches ahead": Hisao Matsuura, equity strategist at Nomura </h1>

"At the same time, the deadline for the new trade talks has been set for 90 days. We think talks between the two countries are likely to hit some rough patches as the negotiations actually get under way."

Looking forward, Nomura says the start of 2019 could be rocky for the markets with Brexit and company earnings helping add to the uncertainty around the trade war.

"We think the time limit of 90 days for the trade negotiations will only serve to heighten the chances that stock prices will weaken," the bank said.

<h1> "Underlying problems remain unresolved": Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management </h1>

"To be sure, underlying problems remain unresolved. It is not as though existing tariffs are on the verge of being unwound. But what Xi has managed to extract from Trump is a stay on any escalation for three months. That interlude should see a stronger effort to set a framework for more talks and quid-pro quos.

"However, I remain mindful of the broadening bi-partisan skepticism on the US end about its worsening relationship with China. The Chinese views are also coalescing around the notion that the US will simply not tolerate another nation to rise, to the extent where US hegemony in Asia can be seriously challenged.

"The three-month extension must therefore be seen in the context of the "promise fatigue" of the US authorities and Chinese wariness about eventual conflict (if not outright hostility) becoming inevitable."

<h1> Risky assets including Chinese stocks are set for a bounce: Daniel Waldman, strategist at UBS </h1>

"We have shown previously that risky assets (especially outside the US) have priced a substantial risk premia related to trade risks. This premium is unlikely to decline to zero, as markets will likely wait for more details and progress on the negotiations, but some relief should support risky assets, including our long China A-shares versus EM-ex China Top Trade.

"Along similar lines, global yields can rise in response, but the increase in US back-end yields (and particularly real yields) should be capped by generous valuations and some loss in growth momentum."

<h1> "A big step in the right direction": Salman Ahmed, Chief Investment Strategist, at Lombard Odier Investment Management </h1>

"Signs of rapprochement between China and the US is <a id="1474c0ad-d516-356b-a940-935a3efa74e3" href="https://www.lombardodier.com/contents/news/investment-viewpoints/2018/august/trade-wars-is-the-us-shooting-it.html"> certainly good news </a> . This does not reflect a definitive shift in the relationship between the US and China, but the opening up of negotiations is certainly a big step in the right direction.

"We expect the trade war issue to come back on the table as both sides still seem far away from a fully settled position. However, for now, we expect markets to reject some of the more extreme scenarios which have been weighing on sentiment, which will be reflected in asset prices."

<h1> "Some modest upside risks to global growth": Chetan Ahya, chief economist at Morgan Stanley </h1>

The agreement could actually push global growth higher, Morgan Stanley's Ahya said.

"If recent developments result in an eventual de-escalation of trade tensions, we see some modest upside risks to global growth. To be sure, this easing of trade tensions will have a more material impact on China and its partners in the supply chain," Ahya wrote.

"For the US, the growth impact is likely more muted. If the easing of trade tensions were to be sustained, this would help lift business confidence and capex in both US and China,and we project that global growth could be higher by ~10bps than our base case projection of 3.6% for 2019."

<h1> Striking a real deal on trade in 90 days is "a near-impossible task": Ian Shepherdson, chief economist at Pantheon Macroeconomics </h1>

Striking a real deal on trade in 90 days is "a near-impossible task," Shepherdson wrote.

"We expect the deadline to be extended again in due course. The lesson of Saturday night is that both sides want to avoid catastrophe, but neither is hurting badly enough—yet—to make substantial immediate concessions."

It could also, he adds, push the Fed to change course.

"Looking a bit further ahead, the step back from the brink means that the Fed is less likely — we can't say for sure, because anything could happen in the trade negotiations over the next three months — to have to face the awkward question of what to do if the imposition of tariffs on consumer goods simultaneously drives up core inflation sharply and depresses economic growth."

<h1> "He said, Xi said": Sue Trinh, head of Asia EMFX strategy at RBC Capital Markets </h1>

"There are significant gaps between what the US thinks China has agreed and what China thinks the US has agreed," RBC said.

"A lot will depend on developments in the next 90 days, but given the US and China are on different pages, we don’t think the optimism can last. We reiterate trade wars need to be framed in terms of who hurts the least and see the G20 meeting as a stronger win for the US.

"China buys 3 months before tariffs on $200bn in goods rise to 25% while the US knows it will have a deal with sizeable China concessions in 90 days, or it will go ahead with tariffs having cleared the backlog of harvested agri crops. If China doesn’t immediately deliver on that front, the US can easily claim an out clause on the 'deal' in bad faith."

<h1> "Undoubtedly positive for U.S. Transportation companies": Amit Mehrotra, research analyst at Deutsche Bank </h1>

"Despite the temporary nature of Saturday’s deal, the announcement is undoubtedly positive for US transportation companies, with the clear and present perceived risk to US Transportation stocks being China/US trade.

"As such, we expect transportation shares to more accurately reflect expected earnings growth, with forward multiples for US transportation companies contracting at double the rate of the broader market over the course of this year."

<ul><li> <a href="https://www.businessinsider.com/trump-china-trade-war-escalation-g20-goldman-sachs-2018-11?utm_source=intl&amp;utm_medium=ingest">GOLDMAN SACHS: Trump's meeting with Xi is likely to make the trade war much worse</a> </li><li> <a href="https://www.businessinsider.com/trump-china-trade-war-volvo-officially-cancels-ipo-2018-11?utm_source=intl&amp;utm_medium=ingest">Volvo's $30 billion IPO is officially off, and Trump's trade war may be to blame</a> </li><li> <a href="https://www.businessinsider.com/r-supply-chain-reaction-trade-war-refugees-race-to-relocate-to-vietnam-thailand-2018-11?utm_source=intl&amp;utm_medium=ingest">'Refugees' of Trump's trade war are scrambling to move business to Vietnam and Thailand as China tariffs hit hard</a> </li></ul>

SEE ALSO: Global markets are ripping higher after Trump and Xi's trade war agreement

'A bumpy ride ahead': Here's how Wall Street is reacting to Trump and Xi's trade war deal

President Donald Trump and his Chinese counterpart Xi Jinping <a id="f7739147-235a-34e2-ad4f-1df17f80bcc8" href="https://www.businessinsider.com/trump-china-trade-war-xi-jinping-meeting-at-g20-course-2018-11?utm_source=intl&amp;utm_medium=ingest"> will meet on the sidelines of the G20 summit in Buenos Aires, Argentina this weekend </a> , in what is among the most widely watched bilateral meetings of 2018.

There have been tentative signs that a deal may be struck, but according to analysts at Goldman Sachs, the most likely outcome of the meeting is that the trade war actually escalates.

"We currently see 'escalation' as the most likely outcome in the next few months, with slightly over a 50% probability," the note from a Goldman team led by Andrew Tilton said.

That scenario, according to the report, would mean tariff rates rise to 25% on all imports currently under tariff, while tariffs are extended to remaining Chinese imports. The other, less likely, near-term scenarios Goldman Sachs outlines in the note are a 'pause,' and a 'deal.'

"The chances of a comprehensive deal are pretty low in the near term (10%), though rising over the course of 2019," the bank said. "By late 2019, however, we think it is likely we will have at least reached a 'pause.'"

On the line is the future of global trade, with a positive meeting likely seeing a deescalation of the trade conflict between the two countries, and a negative one threatening to see the start of <a id="0912a1f4-337e-3756-af14-b24e3319b3f7" href="https://www.businessinsider.com/category/us-china-trade-war?utm_source=intl&amp;utm_medium=ingest"> a full blown trade war. </a>

Read more: Trump claims car companies are 'pouring' into the US. The reality is a lot more troubling

As it stands, tariffs have been levied by the Trump administration on around half of all Chinese goods imported to the USA, with a value of about $250 billion. China has imposed retaliatory tariffs on around $110 billion of US goods.

An unsuccessful meeting, however, could see that number double, with the US levying tariffs on all $500 billion or so of Chinese goods that come into the USA each year.

In such a scenario, China has threatened to retaliate in kind, placing levies on all goods imported from the US.

The pause scenario, Goldman says, means: "existing tariffs remain in place but the two sides agree to keep talking with escalation put on hold," the analysts wrote.

And the deal: "which we think is unlikely in the near term, would involve complete rollback of the current tariffs."

The assets most sensitive to the trade outcome are likely to be the renminbi and equities, Goldman Sachs said.

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GOLDMAN SACHS: Trump's meeting with Xi is likely to make the trade war much worse

US President Donald Trump renewed his attacks on GM Thursday morning, <a id="0283f538-fd96-39a5-a9a7-5925a37f19d8" href="https://twitter.com/realDonaldTrump/status/1068106609644183554"> sending a tweet </a> in which he described the firm as "very counter to what other auto ... companies are doing."

His tweet continued: "Big Steel is opening and renovating plants all over the country. Auto companies are pouring into the U.S., including BMW, which just announced a major new plant. The U.S.A. is booming!"

Not quite. Ford just last month announced that it would be forced to lay off employees as it cuts costs. While Trump could likely claim BMW building a new plant in the US as a big win, the German company has far from confirmed any plans, and has also shown signs that the trade war is actively hurting its business in the USA.

Honda, one of Japan's largest automakers, has also felt the pain from Trump's tariff agenda.

For Ford, some of the impetus for the layoffs is a restructuring program the company is undertaking, but the layoffs are also related to the president's trade war, with the company citing recent sales woes in China and increased material costs as driving some of their pain.

Ford CEO Jim Hackett told an audience at a Bloomberg conference that the steel and aluminum tariffs imposed by the administration <a id="ab19f0e0-8515-3dba-a05b-37650263c722" href="https://www.businessinsider.com/r-ford-ceo-says-metals-tariffs-cost-company-1-billion-2018-9?r=UK&amp;IR=T?utm_source=intl&amp;utm_medium=ingest"> will cost the company $1 billion </a> in 2018 and 2019.

Honda said it was in a similar boat.Rick Schostek, executive vice president for Honda North America, <a id="f93a1e03-2d47-354b-a5de-3e378bbbcc30" href="https://www.americanshipper.com/main/full/us-automakers-warn-tariff-would-stall-industry-72589.aspx?source=Big4"> expressed concerns </a> about the steel tariffs during a Senate Finance Committee hearing in late September.

"So, while we’re paying relatively little in the way of tariffs on steel, the price of domestic steel has increased as a result of the tariff, saddling us with hundreds of millions of dollars in new, unplanned cost,"Schostek said.

Read more: Volvo's $30 billion IPO is officially off, and Trump's trade war is to blame

It's a sensitive issue for Trump because the blue-collar workers in the Rust Belt make up a significant block of his base.

Since General Motors announced on Monday that it will cut 14,000 jobs and idle manufacturing plants in the Midwestern states of Ohio and Michigan, Trump has had the company squarely in his line of sight, firing off several tweets attacking the decision of GM and its CEO Mary Barra.

He also claims to have admonished Barra in person, and said he told the CEO that she had "better" reopen plants in the US soon.

<h1> "Auto companies are pouring into the U.S., including BMW, which just announced a major new plant." </h1>

Even BMW's new plant isn't as rosy a picture as Trump is painting: <a id="2d32e4b9-df3e-348d-a82d-d976010e3acb" href="https://uk.reuters.com/video/2018/11/28/bmw-considers-second-us-plant-over-worri?videoId=486282743"> BMW CEO Harald Krueger said on Tuesday that the German auto giant is considering building a second plant that would produce engines and transmissions. </a>

"We're at the range where you could think about a second location," Krueger said, according to Reuters.

BMW's US plant, located in Greer, South Carolina, <a id="ea73245a-0c77-3faf-acff-efad86244cde" href="http://uk.businessinsider.com/trump-tariff-china-trade-war-ford-bmw-automakers-pain-2018-9?utm_source=intl&amp;utm_medium=ingest"> produces the X3 and X5 models for the German firm </a> . Both cars are hugely popular in China, but because of the retaliation of the Chinese government against US tariffs, are subject to tariffs of their own.

Auto exports from the Port of Charleston — where cars made at the Greer plant are shipped — dived roughly 35% in August compared to the same month in 2017, according to a report from the Charleston Post &amp; Courier.

The threat of auto tariffs continues to loom large over the car manufacturing sector. Trump has <a id="0a3c3d4b-d40c-3767-a5bf-fdf661a4f2ab" href="https://www.businessinsider.com/trump-tariffs-cars-trucks-autos-from-eu-europe-2018-6?utm_source=intl&amp;utm_medium=ingest"> threatened to impose 25% tariffs </a> on all autos and auto parts coming into the US to extract concessions from trading partners including the European Union and Canada.

He is yet to follow through on such threats, but earlier this month it was reported that <a id="5f7e8d7f-2303-38ed-a3a3-b3bd1a3baace" href="http://uk.businessinsider.com/trump-trade-war-auto-car-tariff-eu-concern-negotiation-tactic-2018-11?utm_source=intl&amp;utm_medium=ingest"> the White House was circulating a report discussing the prospect of auto tariffs </a> .

Such tariffs, <a id="ebd5b80a-a9ae-3d4d-a4bd-0f34fbbe04b0" href="https://piie.com/blogs/trade-investment-policy-watch/trumps-proposed-auto-tariffs-would-throw-us-automakers-and#_ftn1"> according to an analysis released by the Peterson Institute for International Economics in May </a> , could see production fall by 1.5% and "cause 195,000 US workers to lose their jobs over a 1- to 3-year period or possibly longer."

"The US auto and parts industries would shed 1.9% of their labor force," the study added.

Correction: An earlier version of this story said Toyota suggested it could cut jobs in the US in response to President Donald Trump's tariffs. The company has not revealed any plans to do so.

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Trump claims car companies are 'pouring' into the US. The reality is a lot more troubling

The Bank of England on Wednesday warned that a “disorderly” no deal Brexit could push the UK into the deepest recession seen since the Second World War, and shrink the pound to the lowest level in its history.

An assessment of a variety of Brexit scenarios published by the central on Wednesday afternoon showed that UK GDP could shrink as much as 8% in a single year under the worst case scenario, far eclipsing the slump seen in the UK during the 2008 financial crisis. That slump was around 6.25%.

Alongside tumbling GDP, the UK could see the pound drop 25% and fall below parity against the dollar for the first time in history.

House prices would fall 30%, while inflation would climb above 6%, and policymakers would be forced to increase interest rates to 5.5%. Unemployment would rise to 7.5%, leaving hundreds of thousands of people out of work.

Under the “disorderly” scenario, the Bank of England sees the UK losing “existing trade arrangements that it currently has with non-EU countries through membership of the EU.”

“The UK’s border infrastructure is assumed to be unable to cope smoothly with customs requirements. There is a pronounced increase in the return investors demand for holding sterling assets. There are spillovers across asset classes,” it added.

The Bank of England was clear that none of the scenarios published today are forecasts of what it thinks will happen, rather they reflect what could happen.

“Our analysis includes scenarios not forecasts. They illustrate what could happen not necessarily what is most likely to happen,” it said.

Will Martin

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