Trade Deal Signing Today Represents A Landmark, But Plenty Of Questions Still Remain

Today’s the day many investors waited for the last two years. Pen is finally hitting paper on a phase one trade deal with China.

That doesn’t mean the market’s out of the woods. Far from it. Stocks gave up some of their early gains yesterday after a news report that tariffs would continue. That took some of the wind out of the sails, even though no one ever was promised that a phase one deal would remove tariffs. The market looks set for a flat to lower opening this morning, judging from overnight trading. 

When you think about the trade with China, there’s still a bunch of delicate issues to work through on topics like intellectual property and technology transfers that didn’t necessarily get resolved by the deal being signed today. In fact, we still don’t know all the details of the phase one agreement. We’ll talk more about all this further down.

JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc (NYSE: C) got earnings off to a good start yesterday. The year-over-year numbers looked great, but let’s not forget the fourth quarter of 2018 was miserable. Earnings comparisons could get more challenging from here on for some of the big banks that were struggling in late 2018 and on the rebound by the first half of 2019. 

Despite solid results from those two and mostly strong showings this morning from several other big banks (see more below), markets have a weaker tone early Wednesday following Tuesday’s slight downturn. If you’re keeping score at home, it’s been more than a month since the S&P 500 Index (SPX) fell two sessions in a row. If today ends that streak, it wouldn’t be the end of the world. Things can’t keep going up forever without a break.

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