By Sam Potter
Happy Big Beautiful Monster Day!
Well, it’s time. President Donald Trump is poised to sign a phase-one trade deal with China in Washington today, an accord he’s recently described as a “big, beautiful monster.” There are doubts about that, given its relative lack of substance compared with normal trade deals, but notably it will for the first time punish Beijing if it fails to deliver on pledges related to its currency, intellectual property and the trade balance. Risk markets have taken a glass-half-full approach in the run-up to the signing, though optimism took a knock Tuesday when Bloomberg reported that existing tariffs on billions of dollars of Chinese goods coming into the U.S. are likely to stay in place until after the American presidential election. The Asian nation may find itself continuing to depend on the nimble tactics that have helped it diversify into new markets to weather the trade war.
Bernie Sanders and Elizabeth Warren tried unsuccessfully to calm the waters Tuesday after a spat involving elitism, sexism and insinuations of lying, in a wide-ranging debate where the top candidates each enjoyed strong moments without yielding a clear winner. With less than three weeks to go before the Iowa caucuses, progressives are starting to fear the Sanders-Warren dispute will pave the way for a moderate like Joe Biden to win the nomination. This was the final debate before Iowa, and was otherwise dominated by war policy in the wake of the showdown between the U.S. and Iran. Here are your top takeaways.
JPMorgan sets the bar high
Bank analysts were bullish on the prospects for Goldman Sachs Group Inc. and Morgan Stanley earnings on Wednesday and Thursday after JPMorgan Chase & Co. and Citigroup Inc. set a high bar, reporting better-than-expected trading, particularly in fixed income. Their shares climbed as the CEOs of both lenders hailed the strength of the U.S. consumer. It was all just about enough to distract from Wells Fargo, which slumped the most in more than a year after adjusted earnings per share missed estimates in results that included $1.5 billion of “litigation accruals for a variety of matters, including previously disclosed retail sales practices matters.”
Overnight, the MSCI Asia Pacific Index slipped 0.4%, with Japan’s Topix Index down 0.5%, dragged lower by electronics and telecommunications giants. In Europe, the Stoxx 600 Index declined 0.1% by 6:13 a.m. Eastern Time as concern over trade tensions lingered before America and China sign their initial accord. S&P 500 futures pointed to a soft open, the 10-year Treasury yield was at 1.79% and gold was up.
Lots on today, even if the big deal signing doesn’t whet your appetite. Mortgage applications data will drop at 7:00 a.m., just an appetizer before the main course: the latest reading of producer prices is due at 8:30 a.m., garnished with a generous helping of Empire manufacturing data. Then, if you have room for dessert, tuck into the Fed’s Beige Book, due out at 2:00 p.m. Also today: Dallas Federal Reserve Bank President Robert Kaplan speaks to the Economic Club of New York. Philadelphia Fed President Patrick Harker talks about “low interest rates and the new normal” at the Harvard Club in New York.