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Investors desperate for good news on trade and global economic growth are in luck.
Over the weekend, Trump downplayed concerns that the US economy is slowing, and he said that China and the United States are “talking!”
Meanwhile, China announced a change to its interest rate system designed to give the struggling corporate sector more support. The move “[opens] up the door for potential rate cuts and should immediately offer up a reprieve to Chinese companies,” said Stephen Innes, managing partner at Valour Markets.
The result: Global markets pushed higher, led by Hong Kong’s Hang Seng.
That doesn’t mean last week’s volatility should be put aside. Trump indicated a trade deal that would eliminate tariffs on billions of dollars worth of goods remains elusive. “China would like to make a deal,” he told reporters on Sunday. “I’m not ready.”
Another red flag: Trump also threw cold water on the notion that Chinese tech firm Huawei could be let off the hook. That’s a major barrier to relieving tensions between Washington and Beijing, which views Huawei as a national champion.
“I don’t want to do business [with Huawei] at all because it’s a national security threat,” Trump said. That follows reports that the US Commerce Department could extend a temporary license that lets American businesses sell components to Huawei despite the US export ban.
Stocks could show resilience this week on hopes that Jerome Powell, chair of the Federal Reserve, will preview the Fed’s September decision when central bankers gather for a summit in Jackson Hole. But there’s reason to be skeptical that central banks can save the bull market at this point.
Dividends paid to global shareholders hit a record $513.8 billion in the second quarter. But the pace of growth was the slowest in more than two years, according to a new report from Janus Henderson, an asset management firm.
The global slowdown comes to dividends
“The deceleration in the world economy and its associated impact on corporate profits has begun to make an impact on dividends,” the report said.
More: “Underlying [dividend] growth of 4.6% is objectively a good figure but is nonetheless weaker than the growth seen over the last couple of years.”
In the United States, the largest contributor to growth came from the banking sector.
Remember: I wrote last week that JPMorgan predicts stock buybacks peaked for the cycle in 2018. Shareholders used to reaping big rewards may be in for an adjustment.
Coming tomorrow: More retails earnings could shine a light on US consumer spending. Home Depot, Kohl’s, TJX and Urban Outfitters will share results.
Coming Wednesday: Can Target (TGT) mirror Walmart’s strong performance?