“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: