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What you need to know about markets this week
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Loading...Donald Trump’s first week as President of the United States is in the books.
On Tuesday and Wednesday, markets rallied and sent each of the major three averages to new record highs, with the Dow cracking 20,000 for the first time. Thursday and Friday, however, saw stocks trade in a narrow range.
The corporate earnings calendar will show this week data for Microsoft (MSFT), Starbucks (SBUX), and Intel (INTC). During the next week we expect reports by Apple (AAPL), Amazon (AMZN), Facebook (FB), ExxonMobil (XOM), UPS (UPS), MasterCard (MA), Visa (V), and Chipotle (CMG).
This week, we heard administration officials throw around ideas like a potential 20% tariff on all imports from Mexico as a solution to make Mexico pay for Trump’s proposed border wall. This could lead to incentivize exports or consuming domestic consumption instead of imports, this is, really, a tariff. Additionally, the imposition of tariffs is something each of the two most recent presidents have done and learned, the hard way, can be a drag on the economy.
A major drop in global tariffs and quotas helped boost global trade after World War II, but in the past decade non-tariff barriers are reversing some of that boost.
Ethan Harris, economist from Bank of America Merrill Lynch says that particularly when looking at the United States’ trade relationship with China, fundamental differences in how each economy is organized are at the root of any tensions that exist.
According to the United States Trade Representative’s latest report to Congress on China’s compliance with the WTO, “Many of the problems that arise in the U.S.-China trade and investment relationship can be traced to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises and other national champions in China’s economy, which continue to generate significant trade distortions that inevitably give rise to trade frictions.”
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