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China to Brief Markets on Trade Progress with U.S.

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Friday, December 13, 2019

The Ahead of Wall Street page here at issues market-worthy reports prior to regular trading for stocks each weekday. This morning, however, we direct people’s attention to what is expected as the opening bell rings this Friday: a news report has just come out that a public briefing on trade will be announced by China’s Commerce Ministry at 9:30am ET.

This obviously points to a new step in the near-two-year trade war between the U.S. and China. The briefing will reportedly include involvement from one of the main principles in negotiations from the China side in the earlier stages of the trade war.

We imagine trading will mostly dial back as the announcement is made; if it signals an agreement has indeed been reached — and this, to be clear, would be for a “phase one” agreement, which was first bandied about more than two months ago — we can expect the new market highs we’ve enjoyed this week to push notably higher.

There is some question whether China has agreed to commit to certain purchases of U.S. goods, however, particularly in agriculture. That said, the new market highs this week are reflective of positive sentiment regarding some agreement in U.S.-China trade. With all due respect to trade negotiators on both sides of the Pacific, we have heard promises of a coming resolve for a relatively long time.

New Retail Sales data have hit the tape this morning, as well: November’s headline print of +0.2% was down markedly from the +0.5% analysts were looking for. The revision for October was ratcheted up 10 basis points to +0.4%. Stripping out volatile (and prominent ticker-item) automobile sales, we see just +0.1%, well off the expected pace of +0.4%. The previous month’s +0.2% was also bumped up 10 basis points.

Ex-autos & gas, we see 0.0% for last month, also worse than expected. The control number was +0.1%, down from the +0.3% anticipated and +0.3% for October. So Retail Sales have come in lighter than expected this morning, though these figures represent a relative median point in retail sales over the past quarter-century. Thus, we don’t expect markets to react negatively based on this data.

Import Prices for November also came in at +0.2%, in-line with analysts’ expectations. Minus fuel prices, we see a +0.2% again, welcome from October’s -0.2%. Year over year, headline Import Prices register -1.3%. Exports month over month reached +0.2% as well, with year-over-year exports also at -1.3%.

These figures bring us back around to the anticipated news this morning: a Phase One trade deal with China. An agreement made here would boost future months of Import Prices — perhaps not December so much as the first months of 2020 — from current levels that continue the “muddle through” pace we’ve seen for quite some time. An announcement contrary to expectations? That’s anyone’s guess.

Mark Vickery
Senior Editor

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