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Powell heads to Capitol Hill, Trump speaks in NY — What to know in the week ahead

Heidi Chung

The bond market will be closed Monday in observance of Veteran’s Day, but the stock market will remain open.

Federal Reserve Chairman Jerome Powell and President Donald Trump will take centerstage this week.

President Trump will be speaking at the Economic Club of New York during a luncheon Tuesday. Market participants will be listening for details and clarity regarding a potential trade deal between the U.S. and China. In the past week, there have been conflicting messages on whether or not additional tariffs will be imposed on Chinese goods.

President Trump told reporters Friday that he had not yet decided on whether or not to roll back tariffs as part of a phase one trade deal with China. His comments follow reports earlier in the week a spokesperson for China’s Ministry of Commerce said that both the U.S. and China agreed to reduce tariffs in the face of a phase one deal. There are another round of U.S. tariffs on Chinese goods set to go into effect December 15.

Economists are cautious about the potential trade deal, as the impact of the ongoing trade war continue to affect the economy. “As the talks go on, tariffs continue to hammer the US economy,” UBS economist Seth Carpenter wrote in a note to clients Friday. “Imports of goods tariffed in the first $250 bln tranches continue to drift lower and are now 40% below the pre-tariff peak. Goods tariffed on Sep 1 fell 20% in the first month. Examples of tariff avoidance are scarce and even amongst that set we see some successes (mattresses) and some failures (toys).”

Meanwhile, Fed Chair Powell will head to Capitol Hill to testify before Congress. Wednesday at 11 a.m. ET, Powell will go before the Joint Economic Committee to discuss the economic outlook, and on Thursday at 10 a.m. ET, Powell will testify before the House Budget Committee.

Investors will look for clues on the rate decision in December, comments on the effects of the phase one trade deal and handling of the Fed’s balance sheet. Capital Economics expects that Powell will likely to reinforce the Fed’s wait-and-see message when he testifies on the Hill.

On the economic data side, given that the consumer represents two-thirds of the economy, retail sales figures for October will be in focus on Friday. After a 0.3% drop in September, economics are predicting a rebound in October.

“The consumer sector remains solid despite a slowdown in global manufacturing and depressed business sentiment, and the most recent labor market data suggest this resiliency should continue,” Credit Suisse wrote in a note Thursday. “The Fed has set a high threshold for another interest rate change. An upside surprise in retail sales is likely to reinforce the decline in expectations of near-term recession risks, while a large downside surprise is likely to be outweighed by the improvement in labor market and services sentiment data recently.”

While earnings season slows down significantly this week, Walmart earnings will be closely monitored by investors when the world’s largest retailer reports third-quarter Thursday morning.

SAN LEANDRO, CALIFORNIA - SEPTEMBER 03: An exterior view of a Walmart store on September 03, 2019 in San Leandro, California. Walmart, America's largest retailer, announced that it will reduce the sales of gun ammunition that can be used in handguns and assault style rifles, including .223 caliber and 5.56 caliber bullets. The move comes one month after a gunman opened fire on customers at a Walmart store in El Paso, Texas.  (Photo by Justin Sullivan/Getty Images)
An exterior view of a Walmart store in San Leandro, California. (Photo by Justin Sullivan/Getty Images)

Analysts are expecting another strong quarter for Walmart. Same-store sales, a key metric for retailers, are anticipated to have jumped 3.1% at Walmart and 1.4% at Sam’s Club during the third quarter.

Walmart’s third quarter follows a beat and raise second quarter. Walmart’s bet on e-commerce is certainly paying off, as the retailer is on pace to meet its 35% online-sales growth target this year. During the second quarter, online sales grew 37% at Walmart with strong growth in grocery. Sam’s Club’s online sales grew 35% in Q2.

Shares of the retail giant have soared 28% this year.

Economic calendar

Monday: N/A

Tuesday: NFIB Small Business Optimism, October (102.0 expected, 101.8 in September)

Wednesday: MBA Mortgage Applications, week ended November 8 (-0.1% prior); CPI month-on-month, October (0.3% expected, 0.0% in September); CPI excluding Food and Energy month-on-month, October (0.2% expected, 0.1% in September); CPI year-on-year, October (1.7% expected, 1.7% in September); CPI excluding Food and Energy year-on-year, October (2.4% expected, 2.4% in September); Monthly Budget Statement, October (-$128.2 billion expected, $82.8 billion in September)

Thursday: PPI Final Demand month-on-month, October (0.3% expected, -0.3% in September); PPI excluding Food and Energy month-on-month, October (0.2% expected, -0.3% in September); PPI Final Demand year-on-year, October (0.9% expected, 1.4% in September); PPI excluding Food and Energy year-on-year, October (1.5% expected, 2.0% in September)

Friday: Retail sales, October (0.1% expected, -0.3% in September); Retail Sales excluding Autos, October (0.4% expected, -0.1% in September); Retail Sales excluding Auto and Gas, October (0.0% in September)

Earnings calendar

Monday: N/A

Tuesday: Tyson Foods (TSN), D.R. Horton (DHI), Advanced Auto Parts (AAP) before market open; Skyworks (SWKS), Tilray (TLRY) after market close

Wednesday: Luckin Coffee (LK) before market open; Cisco (CSCO) after market close

Thursday: Viacom (VIAB), Walmart (WMT), Sina (SINA) before market open; Applied Materials (AMAT), Nvidia (NVDA) after market close

Friday: J.C.Penney (JCP), JD.com (JD) before market opens

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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