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What investors should expect from US-China trade talks

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Prospects of a sweeping trade deal between the United States and China are dimming as negotiators prepare to resume two days of talks.

Pessimism inside the Trump administration is largely based on signals from Beijing that it’s unlikely to make major concessions during the 13th round of talks, raising speculation that both sides may try to reach for a “mini deal.”

What’s a mini deal? An agreement could include new purchases of American farm products in exchange for wiping out additional tariffs set to kick in starting next week.

President Donald Trump agreed in September to postpone an increase in tariffs on $250 billion in Chinese goods from 25% to 30% until October 15. He also delayed a tranche of tariffs until mid-December to avoid hurting consumers during the holiday shopping season.

Beijing has shown few signs it is willing to make any of the concessions — like reforms to subsidies and China’s state-economy model — that Trump and his aides are looking for, according to US officials. A fight between China and the NBA has only widened the gap between the two countries.

Political considerations: Beijing has surely kept a close watch on the move to impeach Trump in the US House of Representatives, a political development that could factor in when and how a trade agreement is reached.

“With impeachment on, the odds of significant progress in public are low. What matters is the private commitment of the US administration,” Sebastien Galy, a senior macro strategist at Nordea Asset Management, said in a research note.

Fidelity is the latest broker to slash fees

Breaking this morning: Fidelity Investments will no longer charge customers who buy or sell US stocks, ETFs and options. The broker previously charged $4.95 for online stock trades.

The price change was first reported by the Wall Street Journal. Fidelity had been the last major US broker to resist dropping commissions to zero in the face of intense competition from digital upstarts.

Rival brokers Charles Schwab, TD Ameritrade and E-Trade all said last week that they would eliminate commissions. Industry participants say brokers are going to have to start offering more services if they want to stay competitive.

“For every broker out there, trying to sell services with explicit fees is going to be almost impossible. The next frontier will be centered around providing more financial well-being solutions — expanding beyond just brokerage products,” Bill Capuzzi, CEO of Apex Clearing, told CNN Business.

The big idea: Brokers are going to start looking a lot more like … banks.

Aramco’s IPO could still be a blockbuster

Delayed by a year, Saudi Arabia now looks ready to push ahead with a listing of its giant oil company in the coming weeks. The deal under discussion is smaller than previously touted, but could still turn out to be the biggest IPO on record, Julia wrote before jetting off on a short vacation.

Details, details: Analysts expect that Saudi Arabia will list between 1% and 2% of Saudi Aramco on the Tadawul exchange in Riyadh by the end of the year. An international listing, possibly in Tokyo, could follow in 2020 or 2021.

Splitting the IPO into phases is a departure from the original plan for a market debut in 2018. Then, Saudi Arabia was expected to float 5% of the company, raising as much as $100 billion. It was looking at international markets such as New York or London, as well as Riyadh.

“We’re talking about a much smaller stake sold in the Saudi market,” said Ayham Kamel, the Middle East and North Africa practice head at Eurasia Group, a political risk consultancy.

Estimates of how much the flotation will raise still vary widely. Crown Prince Mohammed bin Salman reportedly wants the deal to value Aramco at $2 trillion; analysts peg it no higher than $1.5 trillion.

Selling 1% at the bottom of that range would fetch $15 billion. But selling 2% at the top could generate $40 billion, eclipsing the record $25 billion raised by Alibaba in 2014.

Up next

Delta Air Lines reports results before US markets open.

Also today

Coming tomorrow: The first reading of the University of Michigan consument sentiment survey for October.

CNN