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The Dow Jones Industrial Average is trending up this morning thanks to optimism over a potential trade deal with China this week.
The two nations are expected to resume trade talks on Thursday; however, recent reports say that U.S. President Donald Trump and Chinese President Xi Jinping will not meet ahead of that deadline. The two are discussing a trade summit at Mar-a-Lago in March.
If progress toward a trade deal isn't made, then get prepared for a volatile week. That's especially true when you factor in another bearish catalyst this week. More on that below.
Here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:
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Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.
The Top Stock Market Stories for Monday
- Wall Street does not seem too optimistic that the White House and Congress will agree on border security funding to prevent another government shutdown later this week. The Wall Street Journal says that the sides are working on a compromise spending package for stronger border security. The current funding for the U.S. government will expire Saturday at midnight. While this continues to drag on, investors are concerned that a ratings agency like Moody's or Fitch Ratings could send a warning about the creditworthiness of the U.S. Treasury. Any cut to the pristine credit of the U.S. government would drive up borrowing costs and reduce confidence in the nation's financial future. That could send stocks tumbling.
- This week, Federal Reserve Chair Jerome Powell will testify on monetary policy before the House Financial Services Committee. Powell will likely face stiff questions from Democrats on the Fed's decision to not raise interest rates during its first meeting of the year, the state of the U.S. economy, and the announced merger between BB&T Corp. (NYSE: BBT) and SunTrust Banks Inc. (NYSE: STI). Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on FOX Business Network last week to discuss the Fed's latest stress tests and the merger that will create the sixth largest bank in the United States.
- Across the Atlantic Ocean, the rhetoric is heating up over Brexit. With a deadline approaching, Prime Minister Theresa May has taken a shot at Labour leader Jeremy Corbyn over his demands for a soft exit. Corbyn set five elements that must be included in a deal for his party to support it, including a customs union with the EU, alignment with the EU's single market, EU environmental protections, and EU-specific workers' rights. May criticized Corbyn's demands given that they effectively would prevent Britain from striking its own trade deals in the future. Britain is very unprepared for a departure from the EU at the moment. New reports indicate that British mobile subscribers may face roaming charges should no deal be reached in the coming weeks.
Money Morning Insight of the Day
According to Bloomberg's latest report, America could be heading for an economic disaster that would rival the Great Recession.
Billionaire Ray Dalio's hedge fund – Bridgewater Associates – has made a $22 billion bet against the market.
And Citibank calls our present situation "eerily reminiscent of the mortgage crisis."
To see why we believe some of the richest players in the world are preparing for a market collapse, click here.
Stocks to Watch Today: AMZN, NFLX, AAPL
- Democrats have been enraged by the sweetheart deal given to Amazon.com Inc. (NASDAQ: AMZN) in New York City. Now, independents like former mayor Michael Bloomberg have criticized the billions in subsidies given to the e-commerce giant. Well, Amazon has responded. The company's executive team is now reevaluating its planned campus in Long Island City, and it could leave the region under pressure.
- Last week, JPMorgan Chase & Co. (NYSE: JPM) released a report that recommended one of the deals of the decade. The bank has called for Apple Inc. (NASDAQ: AAPL) to buy streaming giant Netflix Inc. (NASDAQ: NFLX). This deal is a no-brainer in today's market. We break down what a deal would look like, how it benefits both sides, and how it would be like rocket fuel for Apple stock. Here's what you need to know.
- Look for earnings reports from Brighthouse Financial Inc. (NYSE: BHF), Everest Re Group Ltd. (NYSE: RE), Loews Corp. (NYSE: L), Omega Healthcare Investors Inc. (NYSE: OHI), RCI Hospitality Holdings Inc. (NYSE: RICK), Restaurant Brands International Inc. (NYSE: QSR), and Vornado Realty Trust (NYSE: VNO).