U.S-China Trade Talks Take Center Stage Today

Stocks closed higher yesterday, ahead of today's U.S.-China trade talks.

This will be the thirteenth time they've met in more than a year.

Few are expecting a full-blown trade deal this week. But there are plenty who believe a lessening of tensions, or a trade truce, or even a partial deal could be seen.

But there's been reports out of China that deputy-level talks leading up to today's high-level meeting made no progress.

So we will have to see.

Traders will likely be hanging on every statement, or report having to do with the talks throughout the day.

But when everything is said and done, if any kind of good news comes out of the talks, stocks should benefit.

If the talks end in acrimony, stocks will likely go down.

But stalled talks, with a commitment to keep talking, while disappointing, should not be that bad.

That's because our economy is strong, with full year GDP pacing at a stronger rate than the average annual GDP of this entire 10½ year expansion.

Unemployment is at its lowest level in 50 years!

Consumer confidence is near record highs. (A very important metric given that 70% of our GDP is tied to consumer spending.)

Interest rates are low, and maybe getting lower. (It should also be known that over the last 50 years, there's never been a recession when the Fed Funds rate was under 4%. And right now, the mid-point for the Fed Funds Rate is 1.88%. And that could drop even further when the Fed meets again on October 30^th.)

And corporate earnings continue to impress. (Since stocks typically go up during earnings season, the markets are poised to go higher with earnings season set to officially begin next week on October 16^th.)

Moreover, in spite of stocks trading within a few percent of their all-time highs, I think valuations look great.

I know some people get spooked when they see a high stock price. Of course, the price of a stock tells you nothing about its valuation. For example a $100 stock can be considered a major bargain whereas a $10 stock can be considered overvalued. And vice versa.

But there's no denying the attraction of lower priced stocks. Especially when you find those overlooked gems right before they break out. If you like finding low priced stocks that that too, be sure you read our latest commentary...

3 Keys to Successful Low Priced Stock Investing

Best,

Kevin Matras

Executive Vice President, Zacks Investment Research

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