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The dog days of August could be volatile this year, as trade and the Fed dominate in the week ahead. Markets will be fixated on the always important annual Fed symposium in Jackson Hole, Wyoming, where Fed Chairman Jerome Powell speaks Friday, and central bankers will hold high level discussions about policy and the economy. The turmoil in Turkey could also remain a focus, but it's trade talks that could dominate, and there's a chance they could become a positive catalyst. European trade officials are in Washington Monday for meetings, and U.S. talks are expected to continue with Mexico, with a resolution appearing close. But it is the trade talks with China Wednesday and Thursday that are getting the most attention since there have been no signs of progress, and another wave of tariffs are set to go into effect Thursday.

On Friday, The Wall Street Journal reported that U.S. and Chinese officials are holding talks on a possible way to end the trade dispute, with a potential November meeting between President Donald Trump and China's President Xi Jinping. "If you take the possibility of a trade war with China off the table for a few months that allows the market to work its way higher. This has been one of the market's biggest worries. If you put it on the back burner, it's a good thing," said Ed Keon, chief investment strategist, QMA, a PGIM company. A delegation from Beijing, led by Vice Commerce Minister Wang Shouwen, will hold meetings with U.S. officials led by the Treasury undersecretary, David Malpass.

Bull market becomes longest

The bull market, by some measures, also becomes the longest in recent history Wednesday. Some strategists disagree, and say the last bull market was much longer. However, there are enough believers in the milestone that it was already opening the door to new discussions on where the market is going and when its run might ultimately stop. "We think it lasts through this year and does it last into 2019 and 2020, remains to be seen. What's likely to kill it is a recession, a too aggressive Fed, some kind of policy mistake or some combination of the above," said Keon. "Right now valuations are a little high but they're not nosebleed territory." Keon also said he sees no signs of a recession for next year.

Stocks in the past week were mostly higher, with the up 0.6 percent at 2,850 but the Nasdaq lower, down 0.3 percent at 7,816. Ari Wald, technical analyst at Oppenheimer, said he's watching to see if the market is on the road to building a final top in the latest bull cycle, which he believes is much shorter than the nine years others are highlighting. "We've been making the case we've been positioned for this one last move higher," he said. "We're still expecting new highs and we've been watching the quality of the move." Wald said the last bear market was relatively recent. "All of our work indicates we went through a bear market in 2015 and 2016. We think the best definition is when the index retraces 18 months of performance," he said. That contrasts with conventional thinking that a bear market is triggered when an index or security loses 20 percent of its value.

Fed at Jackson Hole

The Fed in the week ahead risks bringing some volatility to markets. In the bond market, there has been some expectation that the Fed could discuss changing its policy on its balance sheet while at the Jackson Hole symposium. The meeting is more academic. It is not a place where the Fed sets policy but it does float ideas. "[Powell's] probably optimistic on the economy," said Mark Cabana, head of U.S. short-rate strategy at Bank of America Merrill Lynch. "I think he will want to offer some thoughts on changing market structures and implications for strategy... I don't think he's going to say here's exactly what I want for the balance but here's how my leanings are shifting." Cabana said the Fed could ultimately decide to stop shrinking its balance sheet sooner than expected.

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