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G20, Powell Speaks – What You Should Know Next Week



Equities hit record high last week after the Federal Reserve reassured investors, saying the central bank was ready to cut interest rates if necessary.

However, the market is facing a big test this week.

The eagerly awaited meeting between President Donald Trump and President Xi Jinping will take place at the G20 summit in Osaka, Japan. The two leaders will hold an "extended" meeting to discuss the trade. There is still consensus among analysts that no meaningful agreement can be reached at the meeting. Therefore, it is still very likely that the next round of US tariffs will be imposed on Chinese imports.

"Even though both heads of government decide to continue the talks There are too many bridges to cross to close a deal quickly," ING wrote Friday in a note. "We believe this will result in the US launching another round of customs this quarter to increase pressure. China will take revenge. Only when both sides feel the increasing negative effects of the trade war later in the year will they be prepared to make concessions and finally conclude a deal. "

Even though a deal may not materialize immediately, the Trump-Xi meeting is likely to generate further optimism, and markets will continue their uptrend, at least in the short term, according to Capital Economics.

"While we believe that the dispute with China will eventually escalate, the next week's meeting could well come to an end. The exchange of warm words and the agreement to resume talks are likely to continue the stock market continue to push up, "said the research company on Friday in a note. "Trump and Xi will agree on a temporary truce, but we think it's likely that eventually tariffs will be imposed on all Chinese imports."

President Trump also announced that he will also meet with Russian President Vladamir Putin at the G20 summit. [13659008] Meanwhile at 1 pm ET Tuesday, Fed Chairman Jerome Powell will speak in NYC. He will discuss the economic outlook and monetary policy.

"We expect little new information from Powell, but it may go into more detail on how central the external AC streams were for assessing the risks to the committee's outlook," Deutsche Bank said in a statement to customers Friday Preview.

The earnings calendar for this week remains weak, but FedEx, watchmaker Nike, and chipmaker Micron will release their quarterly results.

Economic Calendar

Monday: Chicago Fed National Activity Index, May (0.10 expected, -0.45 ahead); Dallas Fed Manufacturing Activity, June (1.0 expected -5.3 ahead)

Tuesday: FHFA Real Estate Price Index Monthly, April (0.1% ago); Richmond Fed Manufacturing Index, June (7 expected, 5 ahead); New Home Sales, May (685,000 expected, 673,000 ahead); Conference Board Consumer Confidence, June (132.0 expected, 134.1 ahead)

Wednesday: MBA Mortgage Applications, week to June 21 (-3.4% ago); Inventories Wholesale from May, May (0.8% before); Orders for household goods, May (-0.1% expected, -2.1% earlier); Durables excluding transport, May (0.3% expected, 0.0% earlier)

Thursday: GDP, annualized qoq, Q1 (3.2% expected, 3.1% earlier); Personal consumption, Q1 (1.3% ago); GDP price index, Q1 (0.8% expected, 0.8% before); Core PCE quarter on quarter, Q1 (down 1.0%); Initial jobless claims, week ending June 22; Continuing Claims, week of June 15; Bloomberg Consumer Comfort, Week of June 23; Pending home sales month to month, May (1.0% expected, -1.5% earlier)

Friday: personal income, May (0.3% expected, 0.5% earlier); Personal expenses, May (0.4% expected, 0.3% before); MNI Chicago PMI, June (54.3 expected, 54.2 ahead); University of Michigan Sentiment, June (pre 97.9)

Merit calendar

Monday: N / A

Tuesday: Lennar (LEN) before market opening; FedEx (FDX), Micron (MU) after market close

Wednesday: General Mills (GIS) before the stock market opens; Rite Aid (RAD) after market close

Thursday: ConAgra (CAG), Walgreens Boots Alliance (WBA) before market opening; Nike (NKE) after market close

Friday: Constellation Brands (STZ) before market close

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