Calm is fast returning to U.S. equity markets after Monday’s mauling - for now at least.

Helping out are comments from President Trump who told reporters he would know in three to four weeks how well a U.S. delegation’s recent trip to China went, but that he thinks they’ll be “very successful.

As equities hang on every word of this ramped-up trade spat, it seems even the hint that things will work out is enough to give stocks a bump. That’s even as some, like, Micheal O’Rourke, chief strategist at JonesTrading, says markets need to stop rewarding false promises. If the White House “continues to mislead markets about progress, markets will turn on it soon enough,” he says.

Onto our call of the day from the chief investment office at DWS Investment Management (a unit of Deutsche Bank), which warns the current trade dustup could be building into “something worse.”

While the chances of the U.S. and China reaching a give-and-take compromise is still a possibility, this window is shutting fast. “Unless a deal can be struck quickly in the coming weeks, markets will need to prepare themselves for an extended period of economic trench warfare. And large listed U.S. companies in particular could well find themselves in the line of fire,” said DWS in a note to clients.

Explaining what they mean by “economic trench warfare,” DWS says that up until now, China’s strategy has been to “wait, strategically inflict pain, delay and hope U.S. pressure eventually goes away.” But with that strategy apparently not working out, Beijing now may be digging in its view that short-term political and economic pain will reap some longer-term gain.

That sort of “aggressive posturing” aimed at getting concessions is often at the core of escalating conflicts such as what we’re seeing between Beijing and Washington, said DWS. “The nature of trade wars (like actual wars) is that they foster nationalist sentiment and jingoism. The first shots are fired in the hope of quick victories. And before you know it, both sides are stuck in the trenches, with no obvious and politically feasible way out.”

And the strategists worry we are getting to that point “rapidly.” They say watch the Trump administration for signs it gets the seriousness of the matter and is making contingency plans in case things don’t work out. Meanwhile, “downside risk to equities for now outweigh the potential upside.”

The market

The Dow DJIA, +0.19% , S&P 500 SPX, +0.29% and Nasdaq COMP, +0.36% are off to a better start after Monday’s selloff. See more in Market Snapshot.

The dollar DXY, -0.06% continues to lose steam against the yen USDJPY, +0.05% , gold US:GCU8 is softer and crude US:CLU8 is climbing.

It was red ink for Asia, though stocks bounced off lower levels. The Hang Seng HSI, -1.81% finished down 1.5%. Europe stocks SXXP, -1.02% pushed higher.

And bitcoin BTCUSD, +4.37% is busting past $8,000.

The chart

What level would the S&P 500 need to hit to trigger a rate cut from the Federal Reserve? Around 2,305, according to the May survey of fund managers by Bank of America Merrill Lynch, which qualifies as our chart of the day.

The survey also showed investors are taking out some protection against a sharp fall by global stock markets over the next 90 days, but aren’t betting on a full-blown breakdown of U.S.-China trade talks.

The buzz

Facebook’s FB, +0.20% WhatsApp messaging app is urging users to upgrade after discovering a loophole that could result in spyware taking over the operating system of infected phones.

Walmart WMT, +0.52% is ready to take on Amazon AMZN, +0.66% at its own game as the world’s biggest retailer says it will start offering one-day delivery in the US. The rollout will cover just a few places at first, but 75% of the U.S. by the end of the year.

All eyes on Uber UBER, -0.50% , up a little in premarket after shares have taken a beating since last week’s New York debut. We’ll see if investors listen to that rallying cry from Chief Executive Dara Khosrowshahi, who spoke of how shares of Facebook and Amazon both went through bumpy patches after their initial public offerings.

Read: WeWork’s Europe chief pitches co-working cool

Bayer BAYN, +0.29% shares have taken a hit in Europe, after a judge awarded a California couple $2 million over accusations the German chemical group’s Roundup weedkiller caused their cancer.

The economy

A small-business sentiment index hit a four-month high in April, with import prices en route for later. On Wednesday, we’ll get an important U.S. retail sales update. Also watch out for a handful of Fed speakers, including New York Fed President John Williams.

Random reads

Eyebrows raised after Trump praises right-wing leader of Hungary

Retired naval officer makes deepest dive ever to the bottom of the sea—finds trash

“Game of Thrones” apparently has nothing on HBO’s “Chernobyl”

Greek billionaire arrested after $1.3 billion in cannabis found on his jet

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