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Illustration: Lazaro Gamio/Axios

All is calm on the trade war front, and investors are starting to believe that things may just get better.

What's happening: Goldman Sachs research analysts said in a note Sunday evening that they now believe "tariffs on imports from China have likely peaked" and are shifting their view, thanks to "recent developments and apparent progress in US-China negotiations."

Background: China ended its Fourth Plenum meetings without any negative trade war headlines last week, and "constructive" talks between top-level American and Chinese negotiators took place.

  • "In the phone talks, the two sides had earnest and constructive discussions on properly addressing each other's core concerns, and reached principled consensus," China state news agency Xinhua reported.
  • President Trump is reportedly now considering Iowa, Alaska, Hawaii and some locations in China as the location for the Phase 1 trade deal to be signed.

The big picture: There remains little hope of real structural change being implemented in China, but there's growing confidence that further escalation can be avoided.

What they're saying: Tim Stratford, chairman of American Chamber of Commerce in China, said he believed the “Phase 1” deal, which is expected to be signed this month, could prevent a further “downward spiral."

  • However, with an election next year he believes Trump is likely more interested in helping his re-election chances than continuing to take a hard line.
  • “It seems to fit the political goals of the president,” Stratford told the South China Morning Post. “But it’s not addressing the systemic trade issues that the business community would be concerned about on a long-term basis.”

What it means: That's good news for the stock market, where investors are more interested in the removal of tariffs than just about anything else.

  • Since the announcement of the Phase 1 deal on Oct. 11, the S&P 500 has rallied by more than 4% and set three record high closes, including on Friday when the index rose 1% after a stronger-than-expected U.S. jobs report.
  • The S&P has risen 22% in 2019, and analysts from Goldman Sachs said in a note last month that a 30% gain by year-end is realistic.

What's next: With the Fed having cut U.S. interest rates for the third time this year, all eyes are on the trade war.

  • “Trump’s trade policy has definitely softened the U.S. economy and the Fed responds with three cuts and says it’s back in Trump’s court, therefore everyone is looking at what happens now with this trade deal,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, told CNBC.

Go deeper: Investors signal they hate Trump's "Phase 1" China trade deal

Go deeper

Updated 43 mins ago - Politics & Policy

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Illustration: Eniola Odetunde/Axios

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  2. Education: Schools face an uphill battle to reopen during the pandemic.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong puts tens of thousands on lockdown as cases surge — Pfizer to supply 40 million vaccine doses to lower-income countries — Brazil begins distributing AstraZeneca vaccine.
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  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

DOJ: Capitol rioter threatened to "assassinate" Alexandria Ocasio-Cortez

Supporters of former President Trump storm the U.S. Captiol on Jan. 6. Photo: Kent Nishimura / Los Angeles Times via Getty Images

A Texas man who has been charged with storming the U.S. Capitol in the deadly Jan. 6 siege posted death threats against Rep. Alexandria Ocasio-Cortez (D-N.Y.), the Department of Justice said.

The big picture: Garret Miller faces five charges in connection to the riot by supporters of former President Trump, including violent entry and disorderly conduct on Capitol grounds and making threats. According to court documents, Miller posted violent threats online the day of the siege, including tweeting “Assassinate AOC.”

Schumer calls for IG probe into alleged plan by Trump, DOJ lawyer to oust acting AG

Jeffrey Clark speaks next to Deputy US Attorney General Jeffrey Rosen at a news conference in October. Photo: Yuri Gripas/AFP via Getty Images.

Senate Majority Leader Chuck Schumer (D-N.Y.) on Saturday called for the Justice Department inspector general to investigate an alleged plan by former President Trump and a DOJ lawyer to remove the acting attorney general and replace him with someone more willing to investigate unfounded claims of election fraud.

Driving the news: The New York Times first reported Friday that the lawyer, Jeffrey Clark, allegedly devised "ways to cast doubt on the election results and to bolster Mr. Trump’s continuing legal battles and the pressure on Georgia politicians. Because Mr. [Jeffrey] Rosen had refused the president’s entreaties to carry out those plans, Mr. Trump was about to decide whether to fire Mr. Rosen and replace him with Mr. Clark."