Stock market highs signal hopes for trade-war truce: Greenspan

Renewed optimism that the U.S. will reach a trade deal with China, ending months of costly tariffs, is helping drive stock markets to record highs, former Federal Reserve chairman Alan Greenspan says.

“There's no question that the type of tariff structure that we have had and the customs that are flowing in has been a significant deterrent to economic activity,” Greenspan told FOX Business’ Maria Bartiromo during an exclusive interview on Tuesday. Investors have taken heart from China's statement that key officials spoke with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin early Tuesday and agreed to more talks aimed at reaching a deal.

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The latest bit of information comes a day after China's new guidelines for the protection of patents and copyrights, which has been a key issue in the dispute. President Trump has imposed billions of dollars in tariffs on Chinese imports over the past two years, driving up costs for U.S. buyers, in an attempt to force Beijing to given American companies broader access to its markets and end decades of intellectual-property theft.

If “the Chinese U.S. relationship, which is a major one by far, and the world, can come together so that there is a maximum amount of interaction and trade, the expectation is that the economies will rise faster and it's reflected in the stock prices," explained Greenspan. Appointed by former President Ronald Reagan in 1987, Greenspan went on to serve under three more presidents, earning a reputation as a "market whisperer" who could soothe rattled investors.

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U.S. stocks have been surging for weeks after worries over a potential recession began to wane. A strong job market and three interest-rate cuts by the Federal Reserve have helped boost confidence.

The Associated Press contributed to this report.