U.S.-China relationship is rapidly deteriorating, Trump vows to stonewall impeachment probe, and the Fed's not-QE balance sheet expansion. Off track An editorial published in Chinese and English in the China Communist Party-run Global Times newspaper emphasized the low expectations for a trade agreement at talks starting tomorrow in Washington. The paper accused the U.S. of insincerity, saying mutual distrust is growing. Events of the last few days support that, with the U.S. blacklisting Chinese tech companies, discussing investment restrictions and banning travel by some of the country's officials. Rays of hope do remain, however, with the hit to growth in both countries possibly enough to spur the partial deal authorities in Beijing say they are still open to. Stonewall TrumpWhite House efforts to frustrate the Democrats' impeachment investigation were laid bare in a letter to House Speaker Nancy Pelosi, which declared the inquiry unconstitutional and invalid, adding that neither the president nor his administration would participate in it. Pelosi described the letter as "the latest attempt to cover up his betrayal of our democracy." Polling shows that, for now, the majority of Americans support the impeachment process, but are wary about removing President Donald Trump from office. Not QEFederal Reserve Chairman Jerome Powell said the central bank would resume Treasury purchases in an effort to avoid a repeat of recent turmoil in money markets. He emphasized that just because the Fed may start expanding its balance sheet again, it should not be viewed as a return to crisis-era quantitative easing programs. He also suggested policy makers are inching closer to cutting rates at the next meeting, something investors will look for hints of when the minutes of the most recent FOMC discussion are published at 3:00 p.m. today. Markets mixedOvernight the MSCI Asia Pacific Index slipped 0.5% while Japan's Topix index closed 0.3% lower as markets in the region tracked the selloff in the U.S. In Europe, the Stoxx 600 Index was 0.5% higher at 5:50 a.m. Eastern Time with every sector of the gauge advancing as investors welcomed reports that China is still open to a partial trade deal. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 1.553% and gold eased. Coming up…At 10:00 a.m. U.S. August wholesale inventories data and Jolts job openings numbers are published. Crude inventories at 10:30 a.m. are expected to confirm an increase in stockpiles, which has pressured oil prices lately. Fed Chair Jerome Powell speaks at a Fed Listens event in Kansas City. The IMF will publish the analytic chapters from its global economic outlook. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Luke's interested in this morningLet's spill more digital ink over the potential ramifications of an Elizabeth Warren presidency, given the prospect is supposedly being baked into markets. Healthcare stocks (especially UnitedHealth), banks, big tech (like Facebook), and for-profit education are reportedly particularly vulnerable. Drawing on the work of Keynes, my colleague Joe Weisenthal flags that the one of the big things markets have to fear is fear of a business-unfriendly president itself. Meanwhile, RBC's Lori Calvasina suggested any pain from a Warren administration "is likely to be temporary," and Bloomberg Opinion's Conor Sen thinks that for banks, she's the best candidate in the field. Perhaps all or some of these arguments will be proven correct in due course. But there are disclaimers to attach to these prognostications, particularly the bearish ones. First off, given the chasm between predictions of the market impact and what transpired after the 2016 election, more than a dollop of humility is required. Secondly, it almost beggars belief to suggest a market that swings on the size of the Chinese trade delegation heading to Washington is simultaneously aptly pricing in potential changes in policy that are more than a year away from potentially becoming reality. Thirdly, and perhaps most importantly, the biggest policy gulf between the Democratic frontrunner and Joe Biden, her closest competitor, is her promise to ban fracking on the first day of her presidency. Thus far, I haven't seen an analyst highlight unusual put-option activity or a "Warren discount" being baked into some of the more domestic pure-play fracking firms. What gives?  Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more. | 
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