China 🇨🇳 is considering accelerated economic stimulus measures to respond to new tariffs from the U.S. Over the past weekend, senior officials met to discuss boosting domestic consumption, supporting exports, and stabilizing the market.

This indicates that China is preparing for a trade war, and the People's Bank of China will need to intervene by printing money and injecting it into the market. Similarly, the Fed cannot remain passive, especially as President Trump continues to push for higher tariffs, and it is becoming increasingly clear that this is a move aimed directly at China.

This is why the trade war has a strong impact on financial markets in the short term. Subsequently, central banks begin to lower interest rates and ease monetary policy, which causes asset prices to rise while the economy continues to weaken. That is why the economy and financial markets are two different entities.