“No amount of sophistication is going to allay the fact that all your knowledge is about the past and all your decisions are about the future.” — Ian H. Wilson

1. Federal Reserve Signals Interest Rates Could Climb Sooner Than Expected — In its quarterly summary of economic projections, the Fed revealed that half of the Federal Open Market Committee’s 18 participants now expect to lift interest rates at least once in 2022. Two members moved their so-called dots forward to predict raising interest rates next year. The Fed has telegraphed it wouldn’t raise rates before 2024, but some policy makers have expressed rising concerns over inflation. The signal is a hawkish surprise that came as the Fed suggested it may in the coming months start reducing the emergency $120 billion in monthly Treasury and mortgage-backed securities purchase program it launched in response to the Covid-19 pandemic.
2. China Injects $18.6 Billion Into Banking System During Evergrande Crisis — China’s central bank boosted its gross injection of short-term cash into the financial system after concern over a debt crisis at China Evergrande Group roiled global markets. The People’s Bank of China pumped 120 billion yuan ($18.6 billion) into the banking system through reverse repurchase agreements, resulting in a net injection of 90 billion yuan. That matches the amount seen on Friday, and was just below that of Saturday. Sentiment was also boosted after Evergrande’s onshore property unit said it plans to repay interest due Thursday on its local bonds. That came after Evergrande missed interest payments due Monday to at least two of its largest bank creditors, people familiar with the matter said, asking not to be identified discussing private information.
3. CDC Panel Backs Pfizer Booster Dose for People Ages 65 and Older — the Centers for Disease Control and Prevention adopted the use of booster shots in the U.S. for people at high risk of contracting or falling seriously ill from Covid-19, overruling a narrower recommendation from the agency’s advisers and clearing the way for a widespread vaccination campaign. Millions of Americans who were immunized with the Pfizer Inc.-BioNTech SE vaccine at least six months ago should receive a booster dose, including those aged 65 or older, those in long-term health care facilities and those aged 50 to 64 with underlying medical conditions, the agency said in a statement. People aged 18 to 49 with medical conditions and those who are at high-risk for being exposed to the virus at their workplaces or elsewhere may also receive a third dose.
The endorsement from CDC Director Rochelle Walensky will allow shots to be given immediately. She said the decision, which aligns with the Food and Drug Administration rather than an expert team of reviewers at the CDC, was based on imperfect data and designed to protect those at highest risk as the delta variant continues to spread in the U.S.
4. China’s Casino Crackdown Part of Quest to Transform Macau — China ‘s announcement of revisions to the law governing casinos was one of the most definitive signs yet that there’s no turning back for Beijing. The proposed changes, which are now up for consultation with the public and industry, came just a week after the Chinese government released a plan to further integrate Macau with the Chinese mainland. The city is being encouraged to develop non-gaming industries in a special zone on the neighboring island of Hengqin — currently divided between Guangdong province and Macau — with a focus on high-tech manufacturing, cultural tourism, Chinese medicine, conventions and sports, according to a master plan released by Beijing earlier this month. Gambling won’t be allowed.
5. China Declares Cryptocurrency Transactions Illegal — the People’s Bank of China said the latest notice was to further prevent the risks surrounding crypto trading and to maintain national security and social stability. Naming bitcoin, ether and tether as examples, the central bank said cryptocurrencies are issued by nonmonetary authorities, use encryption technologies and exist in digital form, and shouldn’t be circulated and used in the market as currencies. China banned cryptocurrency exchanges from operating within its borders several years ago, but individuals in the country have continued to find ways to trade bitcoin and other digital currencies via over-the-counter or peer-to-peer transactions.

The week ahead — Economic data from Econoday.com:

“the first stage, when just a few thoughtful investors recognize that, despite the prevailing bullishness, things won’t always be rosy, the second stage, when most investors recognize that things are deteriorating, and the third stage, when everyone’s convinced things can only get worse.”
― Howard Marks

1. Apple Unveiled New iPhone 13 Pro and Watch Series 7 — the Cupertino, Calif., tech giant revealed the iPhone 13 and a smartwatch with a new look during its annual September event, which the company streamed live on its website rather than holding in person because of Covid-19 precautions. The company said the regular version of its iPhone 13 will get 2.5 hours more battery life compared with the previous model. New features include a “cinematic mode” that allows users to capture movie-style video with greater depth using their iPhone cameras.
2. Hard-Hit Industries Renew Calls for Covid-19 Aid Amid Economic Slowdown — restaurants, live-events businesses and gyms are among industries renewing calls for Congress to provide additional financial assistance amid signs the rise in Covid-19 cases is slowing U.S. economic activity. Lawmakers from both parties have signaled support for more aid, but the prospects for a package still likely face an uphill climb as Congress grapples with other legislative priorities. Those include a $1 trillion infrastructure proposal and Democrats’ $3.5 trillion healthcare, education and climate bill. Some Republicans have also previously expressed concern about additional government spending for aid programs.
3. Democratic Tax Plan Would Hit Million-Dollar Households Hardest — households making at least $1 million in income would face a 10.6% tax increase in 2023 under House Democrats’ plan, raising their average federal tax rate to 37.3% from 30.2%, according to the nonpartisan Joint Committee on Taxation.
The committee analysis, shows that low-income households would get significant tax cuts from the proposal for the first few years, largely because of the extension of the expanded child tax credit. The House Democrats’ plan would increase corporate taxes, capital-gains taxes and individual income taxes on high-income households, though the proposed increases don’t go as far in several areas as the Biden administration has sought. House Democrats didn’t propose taxing unrealized capital gains at death or taxing long-term capital gains at the same rates as other income. Instead, they are seeking a 3% surtax on income over $5 million, limits on a 20% deduction for business owners and expansion of a 3.8% tax to hit active business income.
4. Macau Casinos See $18 Billion Wipeout as China Tightens Grip — the Bloomberg Intelligence index of the six big casino operators fell a record 23%. American operators saw the worst selloffs, with Sands China Ltd. sinking as much as 33%, while Wynn Macau Ltd. plunged 34%, both the steepest declines ever. Galaxy Entertainment Group slumped 20%, its sharpest drop in a decade. Wynn Resorts Ltd., Las Vegas Sands Corp. and MGM Resorts International sank for a second day in U.S. trading. Officials said they would change casino regulations to tighten restrictions on operators, including appointing government representatives to “supervise” companies in the world’s biggest gaming hub.
5. FDA Advisory Panel Votes Against Covid-19 Booster Shots for General Population but Endorses It for Some Groups — A Food and Drug Administration advisory panel endorsed booster shots of the Covid-19 vaccine from Pfizer Inc. and BioNTech SE for adults older than 65 years and those at high risk of severe disease, bringing the Biden administration one step closer to starting a booster campaign for millions of Americans. The outside panel voted 16-2 against advising the FDA to approve a booster dose of the vaccine at least six months after the second shot for people 16 years and older. Many panel members said they had concerns about widening booster shots for the general population with limited data about whether the additional doses would be safe and effective. Members said they would potentially support recommending a third dose for certain high-risk groups of the population such as older adults but that there wasn’t enough data to justify giving it to the general population. They said that vaccines such as Pfizer’s are holding up against severe disease.

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. Moderna Unveils Experimental Two-in-One Vaccine for Covid and the Flu — Moderna plans to announce the development of a vaccine candidate that will protect against Covid-19 and the flu, to be known as mRNA-1073. The company will also announce a pediatric vaccine called mRNA-1365, which combines its experimental respiratory syncytial virus vaccine with its experimental human metapneumovirus vaccine. The company also said it would discuss new data from a Phase 1 study of its respiratory syncytial virus vaccine. The company said interim data from the study showed that a single vaccination with the vaccine, known as mRNA-1345, boosted neutralizing antibody titers against the RSV-A virus by 14 times, and against the RSV-B virus by 10 times. The company tested three different dose levels, but said that there wasn’t a significant difference in antibody response between dose levels.
2. Biden Administration Unveils Plan to Cut Prescription-Drug Prices — a Biden administration plan to lower prescription-drug prices offers the first detailed road map of administrative actions the White House would support in addition to legislation aimed at driving down costs. Administrative measures include testing reimbursement for drugs in Medicare based on the clinical value they provide to patients and offering federal funding for research into new treatments.
3. The Flu Is Expected to Make a Comeback This Year, Threatening Hospitals Strained by Delta — the coming flu season is on track to be much worse than the last cycle, according to health experts, who fear an influx of cases could further strain hospitals already overwhelmed by the Delta surge.
The season could also strike earlier and more severely than usual, doctors and researchers said, because many people haven’t been able to build up their natural immune defenses while working from home and avoiding strangers. Many children will be back in school where they can pick up and spread infections, the health experts said. Many adults aren’t working in their offices where they typically get flu shots, or they don’t want another vaccination after getting their Covid-19 doses. And many people will no longer be protected by masking and other Covid-19 restrictions that have been eased.

The week ahead — Economic data from Econoday.com:

“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day – and you lose more than you should had you not listened to hope – the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out – too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts . . . Instead of hoping he must fear; instead of fearing he must hope.” — Jesse Livermore

1. EU Recommends Halting Nonessential Travel From the U.S. Over Covid-19 — the European Union recommended halting nonessential travel from the U.S. because of the rise of Covid-19 cases, ending a summer-vacation reprieve for American tourists. Still, member states retain control over all the rules for tourist travel, such as whether to impose quarantines on unvaccinated travelers and which certificates to accept as proof of having received a vaccine. The EU also axed Israel, Lebanon, Kosovo, North Macedonia and Montenegro, leaving only 18 countries on its list of so-called safe countries. That includes China when and if Beijing permits EU citizens to visit China.
2. Bitcoin Breaks Back Above $50,000 in Crypto Rally — Bitcoin broached the $50,000 level once again as the wider cryptocurrency market continued its rally.
The largest cryptocurrency rose as high as $50,362, having briefly surpassed $50,000 on Aug. 23 as well — a level it hadn’t hit since mid-May. Ether, the second-largest crypto, rose as much as 3% to $3,843, continuing a strong run after its London upgrade early last month. Cryptocurrencies have surged this year amid increased institutional interest and acceleration of development in areas like decentralized finance, known as DeFi, and non-fungible tokens, or NFTs. In addition, Twitter Inc. may be laying the groundwork to allow for Bitcoin tips in its Tip Jar feature, according to a recent report from MacRumors. Meanwhile, El Salvador’s Bitcoin law takes effect Sept. 7.
3. Fed’s Williams Says 2021 Taper Start ‘Could Be Appropriate’ — Federal Reserve Bank of New York President John Williams said “It could be appropriate” for the U.S. central bank to begin tapering its bond-buying program before the year is out. The Fed cut its benchmark interest rate to nearly zero and aggressively bought bonds last year at the onset of the coronavirus pandemic. It has said it will continue the purchases at the current pace of $120 billion per month until the economy has made “substantial further progress” toward its maximum employment and price stability goals, a marker many officials have said they believe will be achieved this year.

The week ahead — Economic data from Econoday.com: