Investment guru Ed Yardeni said savvy investors are being extra cautious ahead of the outcome of the U.S.-China trade negotiations and earnings results.

The Newsmax Finance Insider said Wall Street is worried that if President Donald Trump’s administration does secure a deal with China there will be a sell on the news.

"I suspect that investors are taking a pause here not just because the fed is taking a pause but mostly because they are worried if we do get hit still with China, there might be a lot of selling, the old adage of selling on the news,"  Yardeni, the chief investment strategist at Yardeni Research, told CNBC.

"So I think we're just kind of waiting to see if there's going to be a peace dividend from a likely deal with the Chinese, with the global improving, will that be a positive for earnings," Yardeni said.

Yardeni also said there’s an expectation among some analysts of an earnings recession in the first and second quarters of 2019, which has investors taking a breath.

"We all know there will be an earnings recession in first and second quarters, those seasons are coming up, and I think investors are waiting to see whether the first quarter earnings season, guidance might be positive or negative," Yardeni said.

"So I think everyone is taking a pause here I think the underlying outlook for the economy is pretty good," Yardeni said.

For his part, White House economic adviser Larry Kudlow says there's “hope” that President Trump and Chinese President Xi will meet soon to finalize an agreement.

The veteran financial guru and former Ronald Reagan adviser told Fox News that U.S. officials are optimistic a trade deal will be forged soon.

“I don't want to go into a timeline. There is hope that perhaps by the end of this month or early April, the two leaders will get together and finalize an agreement," said Kudlow, who served as the Trump campaign's senior economic adviser.

"Don't hold me to that because it's not written in cement yet but we must hear back from them. The documents are very clear, we have to get signoff from the Chinese politicians,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.

“The meetings two weeks ago went better than we thought, the documents that we put together with China's top guy went further and deeper than we thought possible, that includes all the issues, the intellectual property theft issues, the ownership issues, commodities, perhaps most importantly from the standpoint of investor Bob Lighthizer who has done such a great job, enforcement issues," said Kudlow.

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