The sudden departure of China's delegation highlights trade tensions

S&P is just shy of a new height. The question is whether investors will be willing to push markets into new high territory now that the Fed has indicated that they will wait and see how the economy performs before cutting rates again.

When the Fed is done, what's next for the markets? What brings us to sustainable new highlights? "The elephant in the room is trade and tariffs, and that will dictate how much upside there is," said Alec Young, CEO, Global Markets Research at FTSE Russell.

Plenty was demonstrated on Friday afternoon, when the S&P 500 lost nearly 20 points on the sudden decision by China officials who met in Washington for trade talks to change the itinerary and return to China earlier than planned, again emphasizing that The trade talks are the marginal movements in the market.

S&P has changed little this week despite a number of other potentially bad news, from the Iran crisis to the increase in oil to the rise in the repo rate to very poor figures for industrial production in China and retail early this week.

"The markets were thrown a basket ball this week, with the Saudi attacks and the Fed repo mess," said Nick Raich, who tracks the company's revenue as Earnings Scout.

You can see it in the market action: business sectors that are sensitive to the global economy that had been up in previous weeks have all fallen back this week:

"It seems that investors may be tempted to chase new high times ahead of the central trade negotiations while the central bank's security blanket has been folded up and laid, "Michael O & # 39; Rourke wrote to customers at Jones Trading yesterday.

As we heard from Federal Express and US Steel this week, it is clear that the main concern for US corporate revenue is the prospect of continuing global decline. But these concerns include much more than just tariffs and trade.

While concerns about a "global downturn" seem vague, global fund managers in the monthly Bank of America / Merrill Lynch Global Fund Manager survey this week referred to several specific issues whose resolution would drive markets forward, including a German fiscal stimulus program, the Fed continued interest rate cuts, a Chinese infrastructure spending program and a Brexit resolution.

And that's why the markets continue to hold on: the belief that the action comes, especially from central banks.

"Until central bank actions do not work and no longer improve earnings expectations, I would not recommend fighting the Fed," Raich told me.

As for revenue in the third and fourth quarters, Raich notes that early reports – with the exception of FedEx – have come in better than feared, and the numbers in the third and fourth quarters, as they come down, do not come down as much first and second quarters.

"It tells me that expectations are already low and that markets are still reluctant to bet on the Fed," he told me.