…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”… Jesse Livermore

1. Delta Air Lines to Impose Monthly Surcharge on Unvaccinated Employees — Delta Air Lines Inc. will impose a $200 monthly surcharge on employees who aren’t vaccinated against Covid-19, becoming the first major U.S. company to levy a penalty to encourage workers to get protected. The fee applies to employees in the airline’s health-care plan who haven’t received shots by Nov. 1. The company also will require weekly testing for employees who aren’t vaccinated by mid-September.
2. Fed’s Chairman Powell Says Taper Could Start in 2021, With No Rush on Rate Hike — Federal Reserve Chair Jerome Powell said the central bank could begin reducing its monthly bond purchases this year, though it won’t be in a hurry to begin raising interest rates thereafter.
The economy has now met the test of “substantial further progress” toward the Fed’s inflation objective that Powell and his colleagues said would be a precondition for tapering the bond purchases, while the labor market has also made “clear progress,” the Fed chief said Friday in the prepared text of a virtual speech at the Kansas City Fed’s annual Jackson Hole symposium.
3. China Could Ban Some U.S. IPOs — the latest reports that China plans to ban data-heavy technology firms from U.S. IPOs confirms what many feared a couple of weeks ago.
Chinese stock regulators, according to The Wall Street Journal on Friday, have alerted some foreign investors and companies that new rules could ban internet companies with a lot of user-related data from listing in the U.S. The moves are the latest in a crackdown by China as it tries to wrest more control over businesses and society more broadly. Among authorities’ top concern, money managers say, is data security and control, as well as more technology independence, as U.S.-China tensions escalate. Another priority: Addressing growing inequality after years of breakneck growth in the digital economy and creating a more level playing field for smaller businesses.
4. Peloton Says U.S. Government Has Subpoenaed Company –the U.S. government has subpoenaed the company for information on its reporting of injuries related to its products.
Both the U.S. Department of Homeland Security and the U.S. Department of Justice have issued subpoenas, Peloton said in its annual filing with the Securities and Exchange Commission. Additionally, it said the SEC is investigating the company’s public disclosures over these issues. The Consumer Product Safety Commission earlier this year warned people with pets or children to cease using the company’s treadmills after it investigated a child dying from being pulled under one of them. Peloton initially pushed back against the regulator, but later apologized and agreed to recall its treadmills.
5. Supreme Court Blocks Biden Administration’s New Eviction Moratorium — The Supreme Court on Thursday lifted the latest federal ban on evictions during the Covid-19 pandemic, siding with landlords against a moratorium the Biden administration imposed this month despite questions about its legality. “The moratorium has put…millions of landlords across the country, at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery,” the court said. “Many landlords have modest means. And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership—the right to exclude.”

The week ahead — Economic data from Econoday.com:

“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. U.S. Retail Sales Fell 1.1% in July — Retail sales—a measure of purchases at stores, at restaurants and online—fell 1.1% last month compared with June, the Commerce Department reported Tuesday. Excluding autos—a category where supply-chain issues have limited available inventory—sales declined 0.4%. Restaurants and bars were a bright spot, with sales rising 1.7% over the month, while sales at nonstore retailers—a proxy for online retail sales—fell 3.1%.
Retail sales rose briskly earlier in the summer, as shoppers boosted spending on services, such as dining out, and away from goods. That shift occurred as more Americans became vaccinated and state and local governments eliminated many Covid-19-related restrictions, some of which have now been reimposed with the recent rise in coronavirus cases.
2. Fed Signals Asset Purchases Likely to Slow This Year — minutes of the FOMC July 27-28 Fed meeting, shed light on an emerging consensus to begin scaling back their $120 billion in monthly purchases of Treasury and mortgage securities at any of their three remaining policy meetings this year. “Most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” the minutes said. Fed officials expected a temporary burst in inflation as the economy struggles to supply enough goods and services to keep up with demand this year. But the spurt has been stronger and broader based than officials expected. On a 12-month basis, the Fed’s preferred inflation gauge, after excluding volatile food and energy categories, rose 3.5% in June, a 30-year high.
3. China Passes One of the World’s Strictest Data-Privacy Laws — China has approved a sweeping privacy law that will curb data collection by technology companies, but that policy analysts say is unlikely to limit the state’s widespread use of surveillance. The national privacy law, China’s first, closely resembles the world’s most robust framework for online privacy protections, Europe’s General Data Protection Regulation, and contains provisions that require any organization or individual handling Chinese citizens’ personal data to minimize data collection and to obtain prior consent. However, unlike in Europe, where governments face more public pressure over data collection, Beijing is expected to maintain broad access to data.
Though the new privacy rules could allow China’s central government to control how lower-level agencies use and share data, nothing suggests “anything resembling legal limits on government surveillance,” said Karman Lucero, a fellow at the Yale Law School Paul Tsai China Center.
4. Passenger Dies of COVID-19 Amid Outbreak on Carnival Cruise Ship — the Carnival Vista cruise ship sailing out of Galveston, Texas, reported 27 people testing positive over two weeks in late July and early August, the highest number of cases since cruises started sailing again. A 77-year-old woman has died from COVID-19 after testing positive while sailing on a Carnival cruise to Belize, marking the first reported death since cruises restarted in the Caribbean and United States in June. Carnival has updated its vaccination policy so that starting on Saturday, most guests will be required to be vaccinated and must also present negative results of a COVID-19 test taken within three days before boarding a ship. Carnival also implemented a mask mandate on Aug. 7 for all passengers in indoor areas.
5. Pentagon Orders Airlines to Help With Afghan Evacuees as U.S. Weighs New Exit Deadline — the president spoke as U.S. airlines were positioning aircraft to comply with a Pentagon order, announced Sunday morning under a rarely invoked law, that compelled six airlines to contribute 18 planes to help with the evacuation. Officials said the commercial aircraft wouldn’t fly in and out of Kabul, the Afghan capital, but would ferry evacuees to the U.S. from bases in Germany, Qatar and Bahrain to ease transport bottlenecks. The escalated activity came as thousands attempted to penetrate the Kabul airport in an effort to flee, fearing retribution from the Taliban, which seized the capital a week ago. Mr. Biden and U.S. officials also warned that Islamic State terrorists posed a threat to Americans in Afghanistan, and that U.S. officials were working to stop potential attacks and defend the airport.

The week ahead — Economic data from Econoday.com:

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
― Howard Marks

1. Pentagon to Mandate Covid-19 Vaccine for U.S. Service Members — Secretary of Defense Lloyd Austin said he would make Covid-19 vaccination mandatory for U.S. service members effective mid-September. The Covid-19 vaccine hasn’t been granted full approval by the U.S. Food and Drug Administration, but has been offered to Americans under an emergency authorization. That provisional status has hindered Mr. Austin’s ability to make it mandatory for U.S. troops.
2. Senate Democrats Outline $3.5 Trillion Antipoverty, Climate Plan — Senate Democrats released an outline of the $3.5 trillion antipoverty and climate plan, further detailing their ambitions for a major overhaul of the nation’s education and healthcare systems that they hope to advance alongside a bipartisan infrastructure bill. The antipoverty plan is set to offer universal prekindergarten, two free years of community college, and expanded Medicare to cover hearing, dental and vision care, among other provisions.To cover the cost, Democrats are seeking to raise taxes on corporations and high-income households. The plan outlined by Senate Majority Leader Chuck Schumer (D., N.Y.) on Monday also includes offering a pathway to lawful permanent status for certain migrants to the U.S. and lowering the price of prescription drugs. It calls for a federal paid leave benefit, a series of energy tax incentives and a program to push the U.S. to receive 80% of its electricity from clean sources by 2030.
3. Texas Hospitals Are Near Capacity as Covid-19 Surges Again — Texas Gov. Greg Abbott asked hospitals to delay elective medical procedures, as rising Covid-19 cases bring hospitals in many parts of the nation’s second-largest state to capacity. In Austin, city and county officials used an emergency alert system over the weekend to text and call residents with the warning that the hospital situation is critical, as the number of available intensive care unit beds in a metro area of more than two million residents dwindled to single digits. In Houston, hospitals are into surge capacity and local officials tracking the city’s wastewater system are finding evidence of higher-than-ever levels of Covid-19. In Arkansas, Gov. Asa Hutchinson said in a tweet late Monday afternoon the state had eight intensive-care beds available after the largest one-day increase in hospitalizations. “Vaccinations reduce hospitalizations,” the governor said. Roughly 43% of the state’s eligible population is fully immunized, according to Arkansas Department of Health data.
4. California Teachers Must Be Vaccinated or Tested Weekly for Covid-19 — California will require schoolteachers and staff to show proof of vaccination or submit to regular coronavirus testing, Gov. Gavin Newsom announced. Under California’s public-health order, public and private school personnel will need to prove they are fully inoculated by Oct. 15 or agree to weekly testing for the virus. Exceptions will be made for those who have medical reasons not to receive the shot.
Several local districts, including New York City, Oakland and San Francisco, have recently enacted similar rules.
5. Global ETF Assets Hit $9 Trillion — Investors poured $705 billion into exchange-traded funds through the first seven months of the year, pushing 2021’s world-wide tally to a record $9.1 trillion, according to data from Morningstar Inc. Net flows so far this year have nearly eclipsed the $736.5 billion investors had moved into ETFs globally in all of 2020. Most of the cash has gone into cheap, index-tracking funds, with large-cap and short-term bond ETFs, as well as products offering inflation protection, attracting significant investor interest, according to the data.

The week ahead — Economic data from Econoday.com:

“The desire for more, the fear of missing out (FOMO), the tendency to compare against others, the influence of the crowd and the dream of the sure thing—these factors are near universal. Thus they have a profound collective impact on most investors and most markets. The result is mistakes, and those mistakes are frequent, widespread and recurring.”
― Howard Marks

1. NYC to Require Vaccination for Many Indoor Activities Such as Restaurants and Gyms — New York City will require people to show proof of vaccination for indoor activities, such as dining, gyms and events, Mayor Bill de Blasio said Tuesday.
The new policy will be phased in the coming weeks and will be implemented Aug. 16. By the week of Sept. 13, the city will begin inspections and enforcement. Businesses will ask patrons to present their vaccination details in the form of the physical card or via a digital app, such as the Excelsior Pass.
The seven-day average number of confirmed and probable daily coronavirus cases is now over 1,200 in New York City, according to figures this week. That figure was less than 250 at the start of July and peaked at more than 6,400 in early January, according to city statistics.
2. Auto Makers Warn Chip Shortage Will Continue to Impact Vehicle Production — Stellantis STLA 5.24% NV, the maker of Jeep, Ram and Chrysler, reported strong first-half earnings on Tuesday and raised its profitability goal for the year, boosted by a rise in demand and pricing. But the world’s third-largest car company by sales also warned that increases in raw-materials prices are likely to get worse in the second half of the year and the semiconductor shortage would continue to hit production. Rival General Motors Co. separately said Tuesday that the chip shortage will lead next week to idle three North American factories that make large pickup trucks, the company’s biggest moneymakers. The semiconductors are critical for vehicles, used in everything from engines and air bags to touch-screen displays.
3. Biden Sets U.S. Goal for Clean Cars to Be Half of 2030 Sales — Biden unveils an executive order establishing the goal for half of all cars sold to be battery-electric, plug-in hybrid or fuel cell-powered by 2030. “These new actions — paired with the investments in the president’s Build Back Better Agenda — will strengthen American leadership in clean cars and trucks by accelerating innovation and manufacturing in the auto sector, bolstering the auto sector domestic supply chain, and growing auto jobs with good pay and benefits,” the White House said in a statement. The mandates are a centerpiece of Biden’s climate plans and mark his administration’s first major effort to use regulation to stem planet-warming greenhouse gases. Federal agencies are developing additional rules targeting methane emissions from oil wells and carbon dioxide releases from power plants after the Trump administration relaxed requirements.
4. Democrats Release Budget Enabling Biden’s $3.5 Trillion Plan — The budget blueprint is expected to be voted on this week in the Senate soon after final passage of Biden’s bipartisan $550 billion infrastructure package. It allows Democrats to bypass Republicans to expand the social safety net and address climate change, paid for by raising taxes on the wealthy and corporations.
The Democratic plan gives the Senate Finance Committee wide latitude to draft policies that would increase taxes on corporations and those making more than $400,000 a year, and instructs lawmakers to provide tax cuts for those making less. In addition the resolution asks the committee to find additional revenue to pay for the $3.5 trillion in spending from health care savings and a new fee on carbon polluters.

The week ahead — Economic data from Econoday.com:

For a piece of information to be desirable, it has to satisfy two criteria: it has to be important, and it has to be knowable. – Warren Buffett

1. GOP Senators Say Agreement Reached on Infrastructure Plan — a bipartisan group of senators and the White House reached a tentative agreement on a $550 billion infrastructure package, a significant breakthrough in the drive to muscle through Congress a massive infusion of spending for roads, bridges and other critical projects. Among the projects getting money, according to the White House:
— $110 billion for roads, bridges and major projects
— $73 billion for electric grid upgrades
— $66 billion for rail and Amtrak improvements
— $65 billion for broadband expansion
— $55 billion for clean drinking water
— $39 billion for transit
— $17 billion for ports and $25 billion for airports
— $7.5 billion for electric vehicle chargers
2. Fed Says Economy Has Made Progress Toward Its Goals, Teeing Up Bond Taper — the Federal Reserve indicated that the economy has made progress toward the central bank’s employment and inflation goals, and officials offered a hint they could begin to reduce their asset purchases later this year.
The Fed since the end of last year has said its monthly purchases of $120 billion in bonds would continue until the economy achieves “substantial further progress” toward the Fed’s goals of low unemployment and inflation reaching 2%. Some officials are concerned that a burst of inflation this year from bottlenecks associated with reopening the economy will prove more durable than previously anticipated. These policy makers are eager to start the taper, in part because they and their colleagues have said they aren’t likely to consider raising interest rates until they are done tapering the asset purchases.
3. U.S. GDP Grows at 6.5% Annual Rate, Less Than 8.4% Estimate — Gross domestic product expanded at a 6.5% annualized rate following a revised 6.3% pace in the first quarter, the Commerce Department’s preliminary estimate. The report underscores the robust bounce back in household demand as well as the challenges companies are facing keeping pace with that demand. Firms’ inability to keep merchandise stocked and bottlenecks in production have capped the speed at which the U.S. pandemic recovery can grow. Personal consumption exceeded forecasts as Americans had both the wherewithal and the opportunity to ramp up spending on services such as dining out. Vaccinations, government aid and a broader reopening of the economy helped drive an annualized 11.8% gain, the second-largest advance since 1952.
4. Robinhood Sold IPO Shares to More Than 300,000 of Its Customers — Robinhood said 301,573 users participated in the IPO, which raised about $2 billion and valued the company at $32 billion. That represents about 1.3% of the company’s 22.5 million funded accounts as of June 30. Breaking with recent Wall Street tradition, the company sold a big chunk of the shares in its hotly anticipated debut to the small-time investors who trade on its app. As much of 25% of the IPO shares went to Robinhood customers, The Wall Street Journal earlier reported. In a typical IPO, individual investors get well under 10%.

The week ahead — Economic data from Econoday.com: