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Trade negotiations, FOMC minutes — What to know in the week ahead

Heidi Chung

A couple of events will put the markets to the test this week. First, high-level trade negotiations between the U.S. and China are expected at the end of the week. Second, the Federal Reserve will be thrust into the spotlight. Several Federal Open Market Committee (FOMC) members are scheduled to speak, and meeting minutes from the FOMC’s September meeting will be released Wednesday.

Investors will be eagerly waiting to see if the the U.S. and China are able to make meaningful progress when negotiators meet in Washington Thursday. In an interview with Bloomberg TV, White House economic advisor Larry Kudlow said Friday that there could be “positive surprises” coming out of the talks.

Tensions have been running hot between the U.S. and China and additional U.S. tariffs are set to go into effect December 15. A lack of trade progress could send investors into a frenzy.

Meanwhile, Fed Chairman Jerome Powell is scheduled to speak on two separate occasions this week. On Tuesday, Powell will be in Denver, Colorado at the The 61st National Association for Business Economics (NABE) Annual Meeting. He will be discussing “Data Dependence in an Evolving Economy.” Wednesday, Powell will be at the Fed Listens: A Community Listening Session in Kansas City, Missouri. The FOMC will also release its September meeting minutes Wednesday afternoon

U.S. President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque TPX IMAGES OF THE DAY

While the recent economic data has illustrated a contracting manufacturing sector and a weakening services sector, the consumer is still strong and the labor market is solid. While the Fed’s next policy move is unknown, what is known is that the FOMC members are divided. Regardless, Powell and the Fed will do whatever is necessary to sustain the expansion.

“The big question is whether Fed officials themselves have been as swayed as the markets by the incoming data?” Capital Economics said in a note Friday. “At that last meeting, five officials disagreed with the September rate cut, five others were not projecting any further cuts this year and, of the seven who were open to additional loosening this year, all of them anticipated only one more 25bp cut before year-end.”

The FOMC minutes should provide a clearer picture as to whether or not the central bank plans on cutting rates at its meeting at the end of this month and then again in December.

Though the earnings schedule remains light for the week, a handful of big companies are gearing up to release results. Pizza giant Domino’s, retailer Levi Strauss, airline Delta and big bank Citigroup’s results with be the highlights.

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Earnings calendar

Monday: N/A

Tuesday: Domino’s Pizza (DPZ) before market open; Levi Strauss (LEVI) after market close

Wednesday: N/A

Thursday: Delta Air Lines (DAL) before market open

Friday: N/A

Economic calendar

Monday: N/A

Tuesday: NFIB Small Business Optimism, September (102.5 expected, 103.1 in August); PPI Final Demand month-on-month, September (0.1% expected, 0.1% in August); PPI excluding food & energy month-on-month, September (0.2% expected, 0.4% in August); PPI Final Demand year-on-year, September (1.8% expected, 1.8% in August); PPI excluding food & energy year-on-year, September (2.3% expected, 2.3% in August)

Wednesday: MBA Mortgage Applications, week ended October 4 (8.1% prior); JOLTS Jobs Openings, August (7217 prior); Wholesale Inventories month-on-month, August final (0.4% expected, 0.4% prior)

Thursday: CPI month-on-month, September (0.1% expected, 0.1% in August); CPI excluding food & energy month-on-month, September (0.2% expected, 0.3% in August); CPI year-on-year, September (1.8% expected, 1.7% in August); CPI excluding food & energy year-on-year, September (2.4% expected, 2.4% in August); Initial Jobless Claims, week ended October 5 (218,000 expected, 219,000 prior); Continuing Claims, week ended September 28 (1.650 million expected, 1.651 million prior); Bloomberg Consumer Comfort, week ended October 6 (62.0 prior)

Friday: Import Price Index month-on-month, September (-0.1% expected, -0.5% in August); University of Michigan Sentiment, October preliminary (92.0 expected, 93.2 prior)

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

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