Wall Street will be eyeing the meeting between U.S. President Donald Trump and Chinese President Xi that takes place near the end of this week at the G-20 summit in Argentina.
The G-20 is a forum at which the world’s 20 leading economies can develop global policies, and the meeting between President Trump and President Xi will give the leaders a chance to make some progress toward resolving the trade war. Investors expecting a comprehensive trade deal will likely be disappointed, though.
At Simply Money Advisors, we believe the best-case scenario would be a temporary ceasefire, allowing real negotiations to take place and perhaps some ironing out of major issues.
Over the weekend, the European Union (EU) approved the United Kingdom’s (UK) deal to leave the EU (also known as “Brexit”). The EU stated this is “best and only deal possible” for the UK to withdraw from the EU, which is set for March 29, 2019.
The deal now needs to be passed by UK’s parliament; however, that is far from guaranteed. The proposal will face challenges in parliament from both lawmakers who want a better deal and from lawmakers who want to stay in the EU.
Oil has plunged from $76 to $50 over the past few weeks. This is due to a combination of supply and demand, but supply has been more of an issue.
The level of U.S. supply is above its 5-year average and the U.S. government has granted many exemptions when it comes to the sanctions it placed on Iranian oil. Russia and Saudi Arabia will get together at the G-20 meeting to discuss possible strategies to stabilize oil prices.
Lower oil prices will be good for consumers like you who will have more money to spend in other areas. On the other side of the equation, energy companies will earn fewer profits.
This week, Wall Street will also be watching key economic releases on housing, personal income and spending, inflation, and overall economic growth.
The Simply Money Point
While the U.S. economy is healthy, an ongoing trade war will weigh on future growth expectations. That, combined with a struggling housing market, likely means our economy could grow closer to 2% than 3% in 2019 unless something changes.