As we noted in the previous part, Goldman Sachs (GS) asked clients to tone down their expectations from markets. There are three key deadlines that could have a market-moving impact.
The first deadline is on February 15 for another US government shutdown. The longest shutdown in US history ended after the two sides agreed to reopen the government temporarily. The shutdown didn’t impact markets. Stocks rallied sharply in January. However, if the talks don’t yield the results that President Trump expects, we could see him use emergency powers.
The second deadline is March 1 for the US-China trade talks. The US (SPY) is seeking a wide range of concessions from China. The US has imposed tariffs on $250 billion worth of Chinese goods. President Trump has indicated that the March 1 deadline is a hard deadline. Some optimism seems to be building that the US and China (FXI) might arrive at a trade deal. However, the US-China trade talks have been plagued by uncertainties over the past year.
US companies including Apple (AAPL) and NVIDIA (NVDA) have warned that China’s slowdown is hurting their earnings. Companies including Amazon (AMZN), Walmart (WMT), Alphabet (GOOG), and Facebook (FB) had lobbied against the tariffs on China. After a weak 2018, Chinese stocks have also looked strong in 2019.
March 29 is the deadline for Britain to leave the European Union. So far, the Brexit process hasn’t been smooth. We don’t know if these three deadlines are hard deadlines or if they might get extended. However, investors can expect volatility as the key deadlines loom.
Read Trump Might be Getting Close to the Biggest Deal Ever Made for more analysis on the US-China trade talks.