President Trump is already laying groundwork for the deadline to be extended if no deal is reached, writes Bill Baruch, President of Blue Line Futures.

U.S.-China trade talks have extended into a sixth day Sunday as Friday’s March 1 deadline to increase tariffs on $200 billion of Chinese goods from 10% to 25% looms. This likely will continue to dominate headlines to start this pivotal week, but it certainly will not be the only topic front and center.

 President Trump is already laying groundwork for the deadline to be extended if no deal is reached before the Chinese envoy leaves tomorrow saying the talks have been “very productive”. Trump also heads east to Vietnam Monday to meet with North Korean dictator Kim Jong Un. It does not appear out of the question that Trump and Chinese President Xi meet in order to finalize a deal before or shortly after the deadline. We continue to question what type of deal is achievable. China’s stock market has already taken its beating and Xi has no timeline to exit power. It has been reported that the two sides are narrowing their differences on intellectual property and the trade balance, however, there are still questions surrounding forced technology transfers among other topics. If China caves, this could be an additional blow to growth simply by diluting the fuel they’ve been running on. This begs the question, is a deal actually good for the global economy and thus the market?

Furthermore, with no timeline to exit power, there is nothing forcing Xi’s hand. Remember the United States and China are not the only two sides with an intertest, the White House has threatened to impose auto tariffs on the EU. We expect to get insight into how likely this is when U.S Trade Representative Robert Lighthizer testifies before Congress midweek. Although this week’s Brexit vote in Parliament was postponed until March 12, the March 29 deadline to leave the EU is still lurking.

Despite the dominance of trade talks in the news, we continue to believe that the Federal Reserve is still in the driver’s seat. Fed Chair Powell is scheduled to testify on the state of the economy before the Senate Banking Committee on Wednesday and Thursday. His comments will be crucial in setting up this week’s landscape and in interpreting the deluge of economic data. Vice Chair Clarida speaks on Monday and Thursday. Consumer Confidence headlines Tuesday’s list of releases and is preceded by a slew of housing data. Durable Goods and Factory Orders are Wednesday. On Thursday, the delayed and much anticipated Q4 GDP is due and Friday we get the Personal consumption expenditures (PCE) Index, the Fed’s preferred inflation indicator.

Global data will also be front and center. German Consumer Climate is due Tuesday and ECB speakers are very relevant once again, Executive Board Member Mersch speaks. On Wednesday the ECB’s Coeure and German Bundesbank President Weidmann both speak. Eurozone Confidence and Climate data is also due. The two most important topics are Chinese Manufacturing which is due Thursday and Friday and Eurozone CPI which is due Friday. We also look to final February regional and Eurozone Manufacturing Friday.

With a more domestic focus, we must not ignore the slew of retail earnings: Home Depot (HD), Macy’s (M), Lowe’s (LOW), Dell (DELL), Best Buy (BBY), TJX Companies (TJX), Hewlett Packard (HP) and many others report through the week.

Lastly, Washington politics could through the market a curve. In addition to US-China trade discussions, President Trump’s former lawyer Michael Cohen is expected to testify in front of Congress Tuesday and Wednesday. Also, Special Counsel Robert Mueller could release his findings before the end of this busy week.

As always, stay nimble.