The open is drawing near on Wall Street, yet the attention of market participants is mostly on Buenos Aires where the G20 Leaders Summit has begun. Early dealings included this morning's signing of the USMCA agreement (which still needs the approval of Congress), but the main event is Saturday's dinner meeting between President Trump and President Xi to discuss trade matters.
Potential outcomes of that meeting are the main topic of conversation. There seems to be a consensus building around the idea that the best one can hope for is a mutual agreement to forestall further tariff actions for several months so that further talks can be conducted to address trade policy issues.
Accordingly, the prospect of an outsized market reaction come Monday morning will likely hinge on any alternate outcome.
U.S. Trade Representative Lighthizer said this morning that he would be surprised if the dinner meeting was not a success.
That remark helped the futures market recoup larger losses, yet the response seemed to be a token one considering it would be silly for Mr. Lighthizer to say right now that he didn't think the dinner meeting would be a success; moreover, it's fair to say the U.S. delegation's idea of success may very well be different from the Chinese delegation's idea of success.
In any event, this market remains as malleable as ever when it comes to hopeful-sounding rhetoric on trade developments from leading officials. In the end, it will be the comments from President Trump and President Xi after the dinner meeting that dictate the market's near-term direction.
The uncertainty over what they might say has been a hangup for the market. The S&P futures are down 5 points and are trading in-line with fair value. The Nasdaq 100 futures are up two points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are down 76 points and are trading 0.1% below fair value.
The G20 meeting, however, isn't the only hangup that has led to a mixed market.
The official manufacturing PMI report for November out of China, which dipped to the 50.0 level that is the equivalent of activity being flat, and a softer than expected 2.0% year-over-year increase in eurozone CPI, have also been distracting factors.
The issue is that those reports have fed concerns about the global growth slowdown, which have been a driver of the multiple compression seen in the midst of the best earnings-reporting period since the third quarter of 2010.
A Bank of America/Merrill Lynch downgrade of Goldman Sachs (GS) to Neutral from Buy, a Wall Street Journal report highlighting views from ex-staffers that General Electric (GE) ignored insurance risks, a New York Times piece highlighting allegations that Facebook (FB) COO Sheryl Sandberg ordered research on George Soros's financial positions, Marriott (MAR) disclosing a data breach, and a Reuters report that a federal judge could still reject the CVS (CVS)/Aetna (AET) deal are among the corporate news items that have also kept a lid on a bullish bias in the early going.
Really, though, if there is a lack of buying interest, the main reason -- or pre-occupation -- is the uncertainty about what will be heard from Buenos Aires.