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(Today's Smart Brevity count: 1,130 words, ~ 4 minutes.)
Illustration: Lazaro Gamio/Axios
All is calm on the trade war front and investors are starting to believe that things may just get better.
What's happening: Goldman Sachs research analysts said in a note Sunday evening that they now believe "tariffs on imports from China have likely peaked" and are shifting their view thanks to "recent developments and apparent progress in US-China negotiations."
Background: China ended its Fourth Plenum meetings without any negative trade war headlines last week and "constructive" talks between top-level American and Chinese negotiators took place.
The big picture: There remains little hope of real structural change being implemented in China, but there's growing confidence that further escalation can be avoided.
What they're saying: Tim Stratford, chairman of American Chamber of Commerce in China, said he believed the “phase one” deal, which is expected to be signed this month, could prevent a further “downward spiral."
What it means: That's good news for the stock market, where investors are more interested in the removal of tariffs than just about anything else.
What's next: With the Fed having cut U.S. interest rates for the third time this year, all eyes are on the trade war.
Manufacturing industries in the U.S. and China seem to be moving in opposite directions.
Why it matters: October was the largest deficit the U.S. manufacturing industry has had with China's in the nearly eight year history of the Caixin survey.
What happened: The Caixin China manufacturing index posted its highest reading since February 2017, beating economists' expectations, while the U.S. ISM manufacturing index barely edged up from its September level, which was the weakest in 10 years.
Yes, but: Caixin's survey is mainly based on responses from 500 smaller private factories, while China's official index, which focuses on 3,000 larger manufacturers, was in contraction during the month.
Of note: A separate index that tracks U.S. manufacturers largely located in the American Midwest had its weakest reading in four years last month and the second lowest in a decade.
The Chinese yuan has weakened significantly against the dollar since Trump announced the U.S. would add 10% tariffs on $300 billion worth of Chinese imports, in addition to the 25% already levied on $250 billion worth of Chinese goods on Aug. 1.
U.S. stock market investors are showing their bullish bias this earnings season, buying big on companies that beat expectations and going easy on selling companies that miss.
What's happening: "Shares of companies that topped forecasts rose an average of 2% in the two days after reporting results, beating the five-year average of 1%, according to data compiled by FactSet. Those that fell short have averaged a 2.1% pullback, below the half-decade average of 2.6%," WSJ's Michael Wursthorn reports.
Watch this space: The enthusiasm has come despite FactSet data showing overall S&P 500 earnings are on pace to decline by almost 3% in Q3, falling for the third quarter in a row.
The New York Fed's GDP projection model predicted U.S. growth would slow to 0.8% in the fourth quarter.
Why it matters: If correct, it would be the weakest quarter since Q4 2015 and put the economy well off the pace of 2018's 2.9% annual growth.
After being on pace to beat the overall market earlier this year, Reuters' April Joyner reports that a Reuters analysis finds "[u]nprofitable U.S. companies holding IPOs this year have had a median stock return of 0%."
On the other side: Apple shares have surged 62% year-to-date, Microsoft stock is up 41%, and the overall S&P tech sector index has risen 36% YTD.
With the eurozone on the brink of recession and its economic engine, Germany, likely already in one, data this week out of Europe will be closely watched.
Of note: Central banks in Poland, Romania, the Czech Republic and Serbia all will announce policy decisions, with each one expected to keep rates on hold. Globally, central banks appear to be following the Fed's lead and holding off on more rate cuts and further policy easing.