S&P 500 Knocked About By Noisy U.S.-China Trade Negotiations

The S&P 500 (Index: SPX) set no new records during the week of trading ending on Friday, 10 May 2019, where stock prices mostly appeared to react to the noise generated by trade negotiations between the United States and China.

Overall, the index stayed within the typical range of values our dividend futures-based model would project if investors were primarily focused on the distant future quarter of 2020-Q1. Not uncoincidentally, this period coincides with the expectation that the Fed will next act to cut its Federal Funds Rate during that quarter, according to the latest probabilities indicated by the CME Group’s Fedwatch Tool.

In collecting the market-moving news headlines of the second week of May 2019, we’ve made of point of including U.S-China trade negotiation-related items, although they mostly contributed a lot of noise during the week where the trajectory of stock prices was concerned.

Monday, 6 May 2019

• Oil bounces up on Iran concern after touching one-month low on trade tensions
• Fed flags high U.S. business debt, asset prices in financial report

• Fed’s Harker says trade tensions are weighing on U.S. businesses
• Fed’s Harker sees downward inflation trend as ‘transitory’

Trade war eruption:

• Trump ratchets up pressure on China, threatens tariff hikes
• Factbox: Tariff wars – duties imposed by Trump and U.S. trading partners

• Explainer: Who pays Trump’s tariffs – China and other exporters or U.S. customers?
• Explainer: Counting the cost of the U.S.-China trade war so far

China considers canceling trade talks with U.S. after Trump vows new tariff hike: WSJ

China’s April export growth seen cooling, imports staying weak: Reuters poll

China stocks fall most in over three years on tariff threats, yuan tumbles

China says trade delegation is preparing to go to the U.S.

Wall St. falls as White House vows to raise China tariffs

Tuesday, 7 May 2019

• Oil ends at lowest in a month on trade concerns, high U.S. crude supplies
• Fed’s Clarida says there’s no good case for rate hikes or cuts: Bloomberg

• Fed’s Kaplan optimistic U.S., China will find ways to tackle trade issues

U.S.: China reneged on trade commitments, sparking Trump tariff hike

Wall Street slides as U.S.-China trade fears rise

Wednesday, 8 May 2019

• Oil rises 1% after surprise fall in U.S. crude stockpiles
• Bigger stimulus developing in China:

• Gaining traction: China’s factory-gate inflation hits four-month high, food prices surge
• China April exports unexpectedly fall but imports rebound as fresh U.S. tariffs loom
• China launches green subsidies to spur investment in hinterland provinces

Trade war negotiations heat up:

• U.S. to hike tariffs on $200 billion worth of Chinese imports: Federal Register
• China to retaliate if U.S. raises tariffs as planned: commerce ministry
• Exclusive: China backtracked on almost all aspects of U.S. trade deal – sources

More of the Fed’s minions share their views:

• Fed’s Barkin: Low unemployment and interest rates mean low recession risk
• Brainard: Fed should consider targeting longer rates in a future downturn

Wall St. falls as investors cautious on trade; Intel slides

Thursday, 9 May 2019

• Bigger stimulus developing in China:

• More China policy easing seen as lending slows, trade risks rise
• Getting traction: China’s factory-gate inflation hits four-month high, food prices surge

Noisy U.S.-China trade war negotiations:

• Trump says Beijing ‘broke’ trade talk deals, pledges to keep tariffs on Chinese goods
• U.S. goods trade deficit with China drops to five-year low
• Fed’s Bostic says scheduled tariff hike could fuel inflation

Oil rebounds as Trump says letter revives China trade hopes

• Trump says he has received ‘beautiful’ letter from China’s Xi

Wall St. dips as investors await outcome of U.S.-China trade talks

Friday, 10 May 2019

• Oil steady, ends week lower as trade tensions weigh
• U.S.-China trade talks stall over draft deal revisions: sources

• Trump says in ‘no rush’ for China trade deal, defends tariffs
• Trump says trade talks with China will continue, tariffs may or may not stay
• Chinese vice premier says trade talks with U.S. went ‘fairly well’: Bloomberg
• U.S.-China negotiators agree to meet again in Beijing: Global Times editor in chief

Tariff tumult boosts view that Fed may cut U.S. rates

• Fed’s Williams says U.S. economy strong despite trade tensions
• Fed’s Bostic says tariff hikes could prompt rate cut if consumers pull back

Wall St. snaps losing streak after Trump’s upbeat trade comments

Barry Ritholtz grouped the week’s major U.S. economy and markets stories into positives and negatives. Please click through to find out how many there were of each!