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After the Federal Reserve meeting and US jobs report, attention pivots to geopolitics next week.
Here’s what to watch in the coming days.
Things could get awkward next week when Japanese prime minister Shinzo Abe visits Washington on Friday in an effort to pursue deeper trade ties with US President Donald Trump. The meeting follows Mr Trump’s claims of currency manipulation and comes after he pulled the US out of the Trans-Pacific Partnership.
Since taking office, Mr Trump has been seeking to renegotiate trade deals to deliver on his campaign promises to put America first. A bilateral trade deal with Japan would be viewed as a win for the Trump administration.
However, Wendy Cutler, who oversaw the US negotiations with Japan during the TPP, said a bilateral deal could prove tricky for Tokyo as it would mean revisiting sensitive issues such as currency, agriculture and cars that proved prickly subjects during negotiations with the Obama administration on the TPP.
On Tuesday, the Commerce Department will drop its trade deficit report for December, and it’s expected that little will change from the previous month when it registered $45.2bn. The report will likely become a political football dropped into the midst of a furious debate over trade, as Mr Trump has vowed to renegotiate or reconsider long-standing partnerships and agreements including Nafta.
Mr Trump has already made noises about a border tax that could shake up US trade relations around the globe, and Republican lawmakers are weighing further changes to the tax code that could benefit exporters.
While economists have argued that trade deficits are a poor tool by which to measure the US’s economic performance, it nonetheless will provide ammunition for politicians as they enter the contentious, and complex, fray over tax and trade policy.
The UK House of Commons will begin its three-day review of the draft law authorizing Prime Minister Theresa May to trigger Brexit.
“After passing its first reading in the House of Commons, the Brexit bill now goes to the Committee stage, where Members of Parliament have another chance to debate the bill and propose amendments (which are unlikely to pass) and then vote for a final time before sending the bill to the House of Lords,” said strategists at TD Securities.
“This gets Prime Minister May one step closer to triggering Article 50 by her preferred date of 7 March.”
More than half of companies listed on the S&P 500 have already reporter their results, and next week earnings season begins to slow with about 80 companies scheduled to unveil their reports. Hasbro, Tyson Foods, Michael Kors, General Motors, Walt Disney, Whole Foods, Yum! Brands, Kellogg and Expedia are on the roster.