“I have learned through the years that after a good run of profits in the markets, it`s very important to take a few days off as a reward. The natural tendency is to keep pushing until the streak ends. But experience has taught me that a rest in the middle of the streak can often extend it.”– Martin Schwartz

1. Trump Support Russia Sanctions Legislation — Congressional leaders have reached an agreement on a set of sweeping sanctions against Russia as punishment for interference in the 2016 U.S. election, engagement in Syria and the annexation of Crimea. Press Secretary Sarah Huckabee Sanders indicated Pres. Trump likely would support the bill, saying that original sanctions legislation “was poorly written but… we support where the legislation is now.” Meanwhile, the European Union could retaliate against U.S. sanctions on Russia, worried about potential harm to European energy deals.
2. Obamacare Repeal Fails in Senate — a plan to repeal and replace Obamacare that Senate Republicans have been working on for months failed to get the 60 votes needed for approval. The tally came out to 43 in favor and 57 against, with nine Republicans voting against the measure. It’s the first of many expected votes this week following the return of John McCain, who has been recovering from recent brain surgery.
3. U.K. to Ban Gas Vehicles from 2040 — Britain is set to ban all new gas and diesel vehicles from 2040 amid fears that rising levels of nitrogen oxide pose a major risk to public health. The commitment, which follows a similar pledge in France, is part of the government’s clean air plan, which has been at the heart of a protracted high court legal battle.
4. Dollar Index Hit by Fed statement — the dollar index has fallen to its lowest level in over a year after the Fed signaled its balance sheet reduction would be starting soon. The central bank kept rates on hold and made no changes to its overall policy, but the statement following its July meeting said balance sheet normalization would start “relatively soon”.
5. Border Adjustment Tax Abandoned — Republican leaders have also abandoned the idea of a border adjustment tax, as part of an effort to present a united front for a broad tax overhaul. “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it,” Steven Mnuchin, Paul Ryan and Mitch McConnell said in a statement.
6. Tobacco Shares Plunge After FDA Proposes Cut to Cigarette Nicotine — the U.S. Food and Drug Administration plans to explore regulating the level of nicotine in conventional cigarettes, a radical step that would reshape the $130 billion American tobacco industry. The move would represent one of the most sweeping federal efforts to reduce smoking since Congress required cigarette packages to carry health warnings in 1965. It follows other moves by President Donald Trump’s FDA Commissioner Scott Gottlieb to try and deal with the high cost of prescription drugs and opioid addiction. Companies effected are stock of cigarette producers including British American Tobacco (BTI), Altria Group (MO) and Philip Morris International (PM).

The week ahead — Economic data from Econoday.com:

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.” – Victor Sperandeo

1. GOP Abandons Healthcare Bill — Republican leaders have given up on their effort to replace Obamacare after the defections of two more GOP senators left the party short of votes needed to pass the American Health Care Act. “Republicans should just REPEAL failing Obamacare now & work on a new Healthcare Plan that will start from a clean slate.
2. Ecuador Breaks Ranks with OPEC by Raising Crude Output — Ecuador has dealt a blow to OPEC unity by announcing it will start raising crude production this month. The country won’t be able to meet its commitment to lower output by 26,000 barrels a day to 522,000, arguing that it needs the money. Its exit is largely immaterial when considering the size of the global oil market, but it could create a dangerous precedent.
3. U.S. Considers Ban on Venezuela crude? — the Trump administration is considering a ban on oil imports from Venezuela, sources told Bloomberg, as part of a spate of sanctions to punish President Maduro. The potential disruptions is Venezuela the third-biggest supplier of oil imports to the U.S., and Gulf refiners like Valero (NYSE:VLO), Chevron (NYSE:CVX) and Phillips 66 (NYSE:PSX) have spent millions tailoring their plants to use its unique brand of heavy, tar-like crude.
4. Facebook to Test Subscription News Product in the Fall — Facebook (NASDAQ:FB) will start testing the product in October, head of news partnerships, Campbell Brown, told the Digital Publishing Innovation Summit. Facebook plans to build a paywall that will require readers to become subscribers to the service after accessing 10 free articles. It will also direct readers to news publishers’ home pages.
5. Facebook Explores ‘Modular’ Device — Facebook is looking into developing a “modular electromechanical device,” according to Business Insider, which described a patent for both a phone and smart speaker as potential product categories. Coincidentally, many key members of Google’s (GOOG, GOOGL) Project Ara team (which had developed a similar project) now work at Facebook’s (NASDAQ:FB) Building 8, the group responsible for the new patent application.

The week ahead — Economic data from Econoday.com:

“When you talk, you are only repeating something you already know, but if you listen, you may learn something new.” — Dalai Lama

1. G20 Recap Following Hamburg Summit — G20 leaders declared in a joint communique “We will continue to fight protectionism including all unfair trade practices,” . The group stepped back from an unequivocal commitment to free trade for the first time since its inaugural summit in 2008. Instead, it said it would “strive to ensure a level playing field,” noting “the importance of reciprocal and mutually advantageous trade and investment frameworks.”
2. Electricity Investment Overtakes Fossils Fuels — fossil fuels are no longer the largest recipient of investment in the energy industry, according to the latest report from the IEA. The electricity sector received the largest level of investment for the first time ever, growing its share by 12 percentage points to 43% between 2014 and 2016. In comparison, over the same period, investments in upstream (exploration and production) oil and gas fell 44%.
3. Hartford Downgraded to Junk by S&P — S&P downgraded Hartford debt to junk bond status last week, citing “growing liquidity pressures” and “weaker market access prospects,” as well as pursuing “expertise in financial restructuring.” Meanwhile, Illinois squirms in the agony of the unknown.
4. Wells Fargo Cutbacks Auto Loans — Wells Fargo (NYSE:WFC) is scaling back and remolding its auto lending business in response to growing stress in the market, as well as a bank-wide push for more centralized risk controls. Although it was the No. 2 U.S. provider of auto loans less than a year ago, Wells has already cut quarterly originations by nearly 30% over the nine months leading into March 31.
5. AAII Weekly Sentiment Survey — even as the market has started to enter rally mode and the Nasdaq is getting back on its feet, bullish sentiment actually saw a slight decline, falling from its already depressed level of 29.58% down to 28.24%. That’s the lowest weekly print since the start of June.

Also, the percentage of bearish respondents declined from 29.86% down to 29.63%. This week’s print actually marks the sixth straight weekly print where bearish sentiment has been below 30%. That’s the longest streak since last August, when it went eight weeks below 40%.

With bulls and bears both below 30%, that means there are a lot of investors who just can’t make up their minds. That’s reflected in the percentage of neutral investors which came in at 42.13, and is the second-highest weekly reading in neutral sentiment this year.
6. Earnings For the Week of July 17 — below is a list of companies reporting earnings this week.

The week ahead — Economic data from Econoday.com:

“When I get hurt in the market, I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well… If you stick around when the market is severely against you, sooner or later they are going to carry you out.” – Randy McKay

1. Qatar Outlook Lowered at Moody’s — Qatar’s credit outlook has been cut to negative by Moody’s, which cited growing financial risks surrounding the country’s diplomatic spat with its Arab neighbors. It comes as Bahrain, Egypt, Saudi Arabia, and the UAE meet in Cairo to consider further sanctions on Doha as a deadline approaches for their list of demands.
2. Poland to Buy Patriot Missile Systems — Poland has agreed to buy Patriot missile defense systems (NYSE:RTN) from the U.S., in a deal worth up to $7.6B, as President Trump visited Warsaw to discuss transatlantic relations. During a joint news conference with Polish President Andrzej Duda, Trump stated it was “past time” for all NATO countries to “get going” on their financial obligations.
3. Berkshire Hathaway Buys Oncor utility — Berkshire Hathaway (BRK.A, BRK.B) has struck a deal to buy bankrupt Energy Future for $9B in cash, giving it Texas-based Oncor (including debt, the deal has an enterprise value of about $18B). The move is a bold bet by Warren Buffett, as Texas regulators blocked two earlier attempts to sell Oncor, one of the largest U.S. power transmission networks.
4. Robots Enter Bank Trading Floors — Robots are moving on to the trading floors of investment banks, and they’re not just doing back-office tasks. “We decided to start a conversation with the front-office guys on whether there were processes we could use a robot to do and we found a number of them,” said UBS’s Beatriz Martin Jimenez. The AI systems will automate post-trade allocation requests, as well as develop new strategies for trading volatility.

The week ahead — Economic data from Econoday.com:

“I think investment psychology is by far the more important element, followed by risk control, with the least important consideration being the question of where you buy and sell.” – Tom Basso

1. EU Slaps Google With €2.4B Fine — Google has been hit with a record €2.4B fine after EU antitrust regulators ruled the company had abused its power by promoting its own shopping comparison service at the top of search results. The penalty is the largest doled out by Brussels for a monopoly abuse case and follows a seven-year-long investigation into the search group’s practices.
2. Sears Canada to Delist from Nasdaq After Filing Bankruptcy — After filing for bankruptcy last week, Sears Canada (NASDAQ:SRSC) has received notice from Nasdaq stating it will delist the company’s shares on July 3, 2017. The firm, which is closing about a quarter of its stores, has been struggling with years of losses and falling sales due to competition from big-box retailers and online merchants.
3. Bank Get Fed’s Blessing to Unleash Big Buybacks, Dividends — the central bank did not object to any of the buybacks or dividend hikes from the 34 banks it reviewed during the second phase of its annual stress test. This is the first time in the seven-year history of the tests implemented in the wake of the financial crisis that all banks have passed. JPMorgan announced a repurchase program of up to $19.4 billion, its biggest since the financial crisis. Citigroup unleashed its largest ever buyback program — worth up to $15.6 billion — and doubled its dividend. Bank of America and Morgan Stanley hiked their quarterly dividends to 12 cents a share and 25 cents a share, respectively.
4. Facebook Crosses 2 Billion-User Line — Facebook has now hit 2B monthly active users, representing a doubling of its user base in just the past five years. It hit the 1B user mark in October 2012, the year it went public. It’s the latest of a few metric milestones for Facebook (NASDAQ:FB), which celebrated 250M daily users of Instagram Stories last week, and Instagram overall hitting 700M MAUs in April.
5. American Airlines (NASDAQ:AAL) Buying New 3-D Carry-On Bag Screeners To Speed Up Airport Security — American Airlines (NASDAQ:AAL) is buying new 3-D carry-on bag screeners that it will deploy at eight U.S. airports once the machines get fully certified by the TSA. 3-D scanners not only give TSA agents a clearer view of potential problems, but the machines – built by Analogic (NASDAQ:ALOG) – are designed to go twice as fast checking carry-on bags.

The week ahead — Economic data from Econoday.com: