Stocks finished mostly higher on Friday, with all of the major indexes closing up for the week.

The previous week's renewed trade tensions between the U.S. and China, after President Xi proposed new trade restrictions on rare earths and President Trump threatened additional 100% tariffs in retaliation, eased a bit following more tempered comments by the administration in the days that followed. Although, they flared up again on Tuesday when President Trump said that China not buying U.S. soybeans was a "hostile act," and that the U.S. was considering terminating some reciprocal elements of trade (such as not buying cooking oil from China) as a response.

Treasury Secretary Scott Bessent has been in communication with his Chinese counterpart, Vice Premier He Lifeng. Staff level talks are expected this week between the two countries. And Secretary Bessent expects to meet with Vice Premier Lifeng before President Trump and President Xi meet next week at the APEC summit in South Korea.

Many believe China's recent confrontational positions are an attempt to gain some leverage ahead of the talks.

Although Mr. Bessent said, "we have substantial levers" of our own that we can pull as well.

While he believes China is open to discussion, and he characterized the overall relationship with them as "good," there clearly are significant issues that need to be ironed out.

Last week unofficially kicked off earnings season when a parade of big banks reported. It's off to a great start as many big banks posted record or near-record earnings. Although, in the midst of that, some became concerned over loan delinquencies after a midweek regulatory filing from Zions Bancorp disclosed a $50 million charge-off for bad loans. But those worries might be overblown since Zions' charge-off appeared to stem from two commercial loans by borrowers facing fraud, and not rising delinquencies from consumer loans such as vehicle notes or mortgages.

But Zions will report earnings today (Monday, 10/20, after the close), and we'll see how they fared and what their guidance looks like.

All in all we'll get 494 companies on deck to report this week as earnings season officially kicks off on Wednesday, 10/22, when Alcoa reports after the close. In queue this week includes: Netflix and Texas Instruments on Tuesday; Tesla and IBM on Wednesday; Intel and The Blackstone Group on Thursday; and Proctor & Gamble and General Dynamics on Friday, amongst others.

Earnings season is always an exciting time since stocks typically go up during earnings season. Q3 earnings are expected to be up 5.5%, with Q4 up 7.3%, Q1'26 up 9.7%, and Q2'26 up 11.0%.

The government shutdown enters day 20 today, making it the 3rd longest shutdown since 1980. And it's on pace to become the second longest shutdown later this week when it's expected to eclipse the 21-day count registered in 1995/1996. (The longest shutdown is 35 days back in 2018/2109.)

October has, so far, lived up to its reputation as being the most volatile month for stocks. But the other part of that reputation is that it usually ends higher. And so far, some of the major indexes are already in the green MTD, with the others within striking distance of doing the same.

And, let's not forget that Q4 is considered the best quarter for stocks.

This week we'll see if the market can build on last week's winning ways.

See you tomorrow,