According to Morgan Stanley, the global economy is likely to head to a recession if the U.S. and China fail to reach a trade deal and the U.S. decides to impose 25% tariffs on the remaining Chinese imports worth $300 billion, as reported by Reuters.
Morgan Stanley further argued that the Fed would cut rates back to zero by 2020 if that were to materialize and China would ramp up the fiscal stimulus by around $500 billion to 3.5% of its GDP.
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