Who Starts a Trade War With a Country They Owe $1.17 Trillion to?

Investors will continue to listen to the war of words between Trump and China on a potential trade war. On the economic front, we have CPI, University of Michigan Investor Sentiment and PPI.

Earnings: Earnings start to rev up towards the end of the week with JP Morgan and Wells Fargo scheduled to announce earnings before the open on Friday (4/13). So far only 23 S&P 500 companies have announced earnings and this week only has 6 S&P 500 companies scheduled to report. Traders will continue to see individual stocks have huge price swings if a company’s earnings outpaces or fall short of what the street expected.

Libor: The news hasn’t been following this enough but LIBOR continues to rise, unlike Treasury yields which have recently declined after the selloff back weeks ago. The 3 month rate has now risen to 2.33%, moving significantily higher than the Fed with interest rates. Investors will watch to see if Libor continues to increase considering $300 TRILLION in debt instruments are based on LIBOR. It is already starting to hurt Japan’s appetite for foreign assets as it becomes more expensive to hedge dollar denominated investments.

1,2,3,4 I declare a trade war:  The latest comments from President Trump and China continued to hurt the market as investors wait to see what a trade war may look like, and how China may react. The broader market sell off last Friday afternoon did not help. The larger the war of words becomes or the additional announcements of products, the more the broader markets will push lower.

FOMC Meeting Minutes: 8:01, 8:02, 8:03 (Can someone please find me for me the Youtube link from Married with Children of Jefferson Darcy saying this). The latest Fed meeting minutes are scheduled to be released on Wednesday (4/11). Investors will be looking closely at the language of the minutes to see what may have changed from the previous FOMC meeting which saw an interest rate hike. Investors will also be looking for additional details if the increase in Treasury yields is impacting their time line to increase interest rates and to normalize the Fed’s balance sheet.

Central Bank Presidents Speak: This week has speeches from the ECB President Super Mario Draghi, Bank of England Governor Mark Carney and Bank of Japan Governor Haruhiko Kuroda. Investors will be listening to their speeches to see if any changes to monetary policy may be on the rise which would increase volatility in the near term.

Celebrity Apresident: Investors and the world will continue to watch to see who will be the next one voted off of Celebrity Apresident. On the hot seat this week is the EPA chief Scott Pruitt. Most cabinet resignations or firings have not meant anything to the stock markets. However, if say White House Chief of Staff John Kelly were to resign, markets could tank again as they see him keeping Trump in line.

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"It is dangerous to be right in matters on which the established authorities are wrong." - Voltaire

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