“In business, financial and market cycles, most excesses on the upside — and the inevitable reactions to the downside, which also tend to overshoot — are the result of exaggerated swings of the pendulum of psychology. Thus understanding and being alert to excessive swings is an entry-level requirement for avoiding harm from cyclical extremes, and hopefully for profiting from them.”
― Howard Marks

1. Fed Officials See Earlier End for Bond Buying — Fed officials discussing the matter at their June 15-16 policy meeting weren’t ready to reduce their $120 billion in monthly purchases of Treasury and mortgage securities, according to minutes of the gathering released Wednesday. The minutes offer a strong sign officials will ramp up more formal deliberations at their next meeting, July 27-28, over when and how to reduce the bond buying. Officials generally judged that, “as a matter of prudent planning, it was important to be well positioned to reduce the pace of asset purchases, if appropriate, in response to unexpected economic developments, including faster-than-anticipated progress” toward the Fed’s inflation and employment goals or risks of too much inflation.
2. Tokyo Olympics to Ban Spectators in City as Virus Resurges — the Tokyo Olympics will ban domestic spectators in events held in Japan’s capital, revising an earlier decision to allow some fans, as the resurgence of virus cases pushed the government to declare a state of emergency in the city. The decision, announced by Olympic Minister Tamayo Marukawa, comes after Japanese Prime Minister Yoshihide Suga declared a fourth state of emergency for Tokyo, running from July 12 through Aug. 22. It’s a reversal from a decision last month to limit the number of spectators at either 10,000 or 50% of venue capacity, whichever is smaller.
More than half of the 43 Olympic and Paralympic venues, including the 68,000-capacity National Stadium that’s set to host the opening ceremony on July 23, are located in Tokyo. Organizers had said that a no-spectator scenario was possible, depending on the virus situation. A decision to bar fans from overseas was announced in March.
3. Biden to Target Railroads, Ocean Shipping in Executive Order — the Biden administration will push regulators to confront consolidation and perceived anticompetitive pricing in the ocean shipping and railroad industries as part of a broad effort to blunt the power of big business to dominate industries, according to a person familiar with the situation. The administration says the relatively small number of major players in the ocean-shipping trade and in the U.S. freight rail business has enabled companies to charge unreasonable fees. The STB proposed a competitive switching rule in 2016 but hasn’t yet acted on it. “The consolidation brought about much-needed rationalization in the system 25 years ago, but the net result is a lot of shippers who are subject to a market-dominant railroad,” said a government official briefed on the White House’s proposal for the STB.
4. Biogen Faces FDA Probe of Alzheimer’s Drug Approval — the head of the U.S. Food and Drug Administration said she is seeking a federal investigation of the approval of the Biogen Inc. Alzheimer’s disease drug Aduhelm, a highly unusual step that will increase scrutiny of a heavily criticized clearance. Aduhelm was granted approval by the FDA last month over the objection of outside scientific advisers who had voted against the drug last November. The agency ordered Biogen to do an additional trial to confirm that the therapy benefits patients, and given nine years to produce data.

The week ahead — Economic data from Econoday.com: