Money Advice

Positive developments on trade; earnings season now in spotlight

Posted by The Simply Money Advisors Team on Apr 16, 2018 12:07:44 PM

A trade war with China has been the major fear gripping the markets over the past few weeks, but fortunately, tensions eased last week thanks to conciliatory comments from President Trump and Chinese President Xi.

President Trump said the back and forth with China is trade negotiations, not a trade war. President Xi stated that China is looking to open its economy more and lower tariffs.

While these statements are nothing new from China and lacked detail, Wall Street breathed a sigh of relief, as it appears the world's largest economies both opened the door for real negotiations. We do not expect a deal in the short run, but this is a step in the right direction.

Also last week, President Trump said he is considering re-entering the Trans Pacific Partnership (TPP) if a more favorable deal can be reached. There was also progress on NAFTA (North American Free Trade Agreement) with a deal possible in early May.

All this points to positive developments for our economy because trade with other nations means better growth and more jobs in the U.S.

This week, Wall Street will be turning its attention to corporate earnings with reports from 59 large-cap companies, including Netflix, Goldman Sachs, Johnson & Johnson, General Electric, and Procter & Gamble.

Analysts have high expectations of about 17% earnings growth for the first quarter compared to 2017's first quarter. The important economic releases this week include reports on retail sales, housing starts, building permits, and industrial production.

The Simply Money Point

There have been some positive developments on trade, but at Simply Money Advisors, we do not expect the tensions to end right away. Meanwhile, the U.S. economy is growing and the risk of a recession this year is very low – which is good news for the stock portion of your investment mix.

Topics: Economy


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