Now that the U.S. and China have agreed on Phase One of a broader trade agreement, we know that a tariff increase on at least $250 billion in Chinese goods to 30% from 25% set for Tuesday will not take place. But a tariff hike announced in September was not rolled back and plans for another hike to go into effect just before the the Christmas holiday on Dec. 15 remain in place.
Still, investors were bullish to end last week, snapping a three week losing streak for the S&P500. With many unanswered questions on the next steps in the trade negotiations, we'll see if that enthusiasm remains, especially as we head into earnings season.
Here's a look at some key events this week:
- Eurozone Industrial Production. How bad are things in Germany?
- Producer Prices in China: September might've been weak, but it's about to get a lot stronger.
- EU GDP
- Economic Indicators for Germany (How bad?)
- U.S. Retail Gas Prices
- EU Consumer Price Index (Inflation is low in the EU. Will it stay that way?)
- Canada Consumer Price Index
- U.S. Retail Sales (September)
- U.S. Industrial Production (September)
- Philadelphia Fed Manufacturing Index
- U.S. Housing Starts (Are low mortgage rates prompting more home building?)
The rest of the year has some major economic events and deadlines that will weigh heavily on investor sentiment. Bank of America's Chief Economist, Ethan Harris, shared this handy calendar that worth paying attention to:
There was some hope that British Prime Minister Boris Johnson would be able to work on a compromise with Parliament and the EU over the weekend to meet the October 31st Brexit deadline, but those appear to have diminished, according to various reports. At issue, is whether or not there will be a customs border between Ireland and Northern Ireland, and how that would work. This week will be crucial in determining whether the U.K. will request an extension to the deadline at the end of the month, or face a hard Brexit and leave the Eu with no deal.
Earnings Season Begins
Third quarter earnings season gets underway next week, and while that quarter is deep in our rear view mirrors, its what companies say about the future that we care about.
About 180 companies in the S&P 500 report next week, and the banks really kick things off on Tuesday with JPMorgan(JPM), Citigroup(C), and Goldman Sachs(GS) among the majors reporting results. Lower interest rates impact their net interest income (the money they make by borrowing low and lending higher), but positive news on the trade front will help their businesses, a lot.
We'll also hear from the online brokers like E*TRADE(ETFC) next week. Their businesses have been rocked by the zero commission battle we have been reporting on, so it will be interesting to see what they say about how they will make up for that last revenue.