Trade negotiations in Malaysia over the weekend unleashed the latest wave of positivity, sending the S&P 500 up about 1% to start the week. Ahead of the Trump/XI meeting on October 30, Treasury Secretary Bessent chose to dole out Treats to the market rather than Tricks. “I think we have a very successful framework for the leaders to discuss on Thursday”, he stated after productive weekend discussions with China’s delegation. While a final decision on the 100% tariffs that President Trump threatened to deploy following Beijing’s latest rare earth plans lays with the President, Bessent said he thinks those levies will be delayed for a year and re-evaluated. Bessent didn’t reveal much detail from his talks, but substantial purchases of US agricultural products (i.e. soybeans), lower controls on rare earths exports and help controlling fentanyl production are likely key items discussed that Trump and Xi will further delve into when they meet. While the S&P 500 is up 1%, gains in the equity market are not equitable. The equal-weight is lagging by about 70bp and small caps by more as they trade closer to flat. Tech is easily the leading factor and the largest caps are on top of the leader board. The ICE Semi index is up almost 3%. On the other end of things are Staples, Materials, Healthcare and Utilities, though any declines are generally modest. Treasury yields are mixed as the curve slightly flattens. The short end is flat to up 1 bp while the long end is flat to down 3bp. It’s not all about trade today, It’s also a Merger Monday. American Water Works and Essential Utilities are combining in an all-stock deal. M&A momentum among banks continues as well, with Huntington Bancshares acquiring Cadence Bank in an all-stock acquisition. Staying in the financial sector, Trian and General Catalyst have proposed acquiring the remaining outstanding shares of Janus Henderson not already owned by Trian. We also have a deal in biotech land with Novartis buying Avidity for $12B.

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