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Stocks Soar On President Trump-President Xi Trade Meeting
Stocks surged yesterday on confirmation that President Trump and President Xi will have an 'extended' meeting at the G20 summit later this month.
Traders cheered the news after waiting for this confirmation for weeks.
President Trump tweeted yesterday morning that he had a "very good telephone conversation" with President Xi and that they would have "an extended meeting" at the summit. The meeting was confirmed by both U.S. news outlets and Chinese state media.
In addition to the presidential meeting, delegations from both countries will be holding talks on the phone and working on trade issues ahead of the meeting. This shows that a meeting of real substance could be taking place next week, increasing the prospect of a real trade deal being agreed to.
Traders are also anxious to hear what the Fed has to say at this afternoon's FOMC Announcement, FOMC Forecast, and Jerome Powell's Fed Chair Press Conference.
Interestingly, there were reports yesterday that the White House, earlier in the year, had looked into whether they could demote Mr. Powell.
Many were quick to dismiss that as old news. And it appears the President was advised against it. That was reiterated by Larry Kudlow, the administration's top economic advisor, who said that was not currently being considered.
However, the President was asked about it and he said, "Let's see what he does."
While some believe that puts pressure on Mr. Powell to cut rates sooner rather than later, 'nobody' is expecting an actual rate cut at today's meeting. But everybody will be listening for any clue as to when that rate cut is coming. (The market is pricing in a 97% certainty that at least one rate cut is coming this year, with others speculating that we could see as many as two or three.) But you never know.
Stocks soared a couple of weeks ago after the Fed indicated they were open to cutting rates.
Similar comments this afternoon could easily do that again.
The S&P is now less than 1% away from their all-time highs.
Whether that catalyst comes tomorrow from the Fed or next week with a possible U.S.-China trade deal – the market is poised for an upside breakout with two big catalysts on deck.
When it comes, nobody knows. But it sure feels like we're close.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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Stocks surged yesterday on confirmation that President Trump and President Xi will have an 'extended' meeting at the G20 summit later this month.
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