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Judging from stock market gyrations in recent weeks, Wall Street has not priced in an escalation in trade tensions with China that was telegraphed months ago by the president.

And judging from trading on Friday, which came amid an about-face from Trump who now says that a deal with China is coming, investors are still confused.

The week ended with a flurry of conflicting reports which suggested, respectively, that a deal was in the works and that, to the contrary, that is not the case.

Trump weighed in on Thursday with a tweet to the effect that talks were going well, adding more optimistic remarks on Friday afternoon which undercut comments from senior White House officials on the same day, including economic advisor Larry Kudlow.

Investors were apparently not sold on Trump’s insistence, with benchmarks chopping sideways following his remarks, after pairing some losses earlier in the day. All major benchmarks were down on the day.

One reason for skepticism is that no clear evidence has emerged that China is willing to budge on some of the Trump administration’s key asks.

“Yes it’s a big obstacle toward getting toward a deal with the Chinese government and think tanks not only avoid answering but sometimes sweepingly deny the allegations [of forced technology transfer],” said Michael Pillsbury, the resident China specialist at the Hudson Institute, the Washington DC-based think tank where Vice-President Mike Pence recently articulated the Trump administration’s China policy.

Pillsbury wrote in an email to Asia Times that a possible framework for a deal presented at Hudson by the Beijing-based China Center for Globalization, which went further than previous reported offers from Beijing, would be taken as an insult by the Trump administration.

BlackRock CEO Larry Fink shared a similar sentiment, speaking at a conference in New York on Thursday.

“I was in China a few weeks ago, and I do believe if the path remains the same in the next few weeks, we’re going to have a full-fledged trade war,” Fink said.

“China [is] a very strong, very proud nation. I think they’re going to stand firm,” he added.

The gap between China and the US on the trade impasse has led to speculation that Trump is trying to boost investor confidence ahead of crucial congressional elections to be held on Tuesday.

“If I was a deeply skeptical person – and I’m only a modestly skeptical person – I would say this is a stunt to juice up the market,” said James Pethokoukis, an economic policy analyst at the American Enterprise Institute, a conservative think tank.

When asked during an interview on CNBC whether he thought the escalation in tariffs would ultimately come at the end of the year, Pethokoukis sounded pessimistic.

“Listen, I still do [expect the new tariffs]. I fundamentally feel this is different […] than NAFTA which was really about getting a so-called better deal. I think this is really about us competing with China on the global stage.”

He added that creating the appearance that a deal was imminent would help Trump with his political base, many of whom depend on agricultural exports to China.

“I imagine, particularly folks in the Midwest, will really like that.”

George Magnus, former chief economist at UBS who is now an associate at the University of Oxford China Center expressed his agreement with that viewpoint, via Twitter:

Before Trump’s comments on the trade deal in the works, stocks started the week on a down note following a report that trade would not even be on the agenda for an upcoming meeting between Trump and Chinese President Xi Jinping at the Group of Twenty meeting in Buenos Aires later this month.

The rough start to the week came after a terrible October for US equities which sent benchmarks near correction territory and fueled speculation of a bear market.

On Wednesday, Trump advisor Larry Kudlow was the first to inject some optimism back into the conversation when he said in an interview with CNBC that tariffs were not “set in stone.”

“It is possible some good positive things could – I say could – come out of President Trump-President Xi talks. It’s possible,” Kudlow said.

Markets, evidently, are not sure which Kudlow – or which Trump – to believe.

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