“Many traders think that it’s only when they know what would happen in the future that they can make money. So, they make many assumptions about the future, including the belief that what is happening at the moment would persist forever — the trend would continue or the range market would persist. They trade as if the present condition is the default condition of the market.”– Ray Dalio

1. U.S. Mid-Atlantic Factory Activity Contracts at Fastest Rate This Year — the Fifth District Survey of Manufacturing Activity’s index for July sank sharply to minus 20 from minus 8 in June, the Federal Reserve Bank of Richmond said Tuesday. A consensus of economists polled by The Wall Street Journal expected it instead to inch up to minus 6.5. The reading below zero means more of the 66-72 firms responding to the survey this month reported decreasing activity than increasing, the fifth month in a row that has happened. Average growth rates of prices paid and received also fell a little in July, pointing to lighter inflationary pressures this month.
2. Trump Strikes Deal With Ally Japan Setting Tariff Rate at 15%-– President Donald Trump on Tuesday stateside announced a “massive” deal with Japan that includes “reciprocal” tariffs of 15% on the country’s exports to the U.S., with auto duties reportedly being lowered to that level as well. Following Trump’s post, Japanese Prime Minister Shigeru Ishiba said that auto tariffs on Tokyo will be lowered to 15% — from the current 25% that is levied across countries — as part of the deal, Reuters reported. Auto exports to the U.S. are a cornerstone of Japan’s economy, making up 28.3% of all shipments in 2024, according to customs data.
3. Trump Pushes Powell on Interest Rates During Tour of Fed — Donald Trump downplayed jostling with Federal Reserve Chairman Jerome Powell over cost overruns during a tour of the central bank’s renovation project, even as he used the interaction to again push for lower interest rates. The president’s visit was a rare spectacle and a public escalation of his clash with the central bank chief. While Trump has regularly lambasted Powell on social media — and pushed him over interest rates during a private White House meeting in May — Thursday’s visit offered him the chance to voice his concerns directly on the chairman’s own turf.
4. U.S. Durable Goods Orders Sink on Lower Aircraft Orders — total orders for goods made to last at least three years, such as automobiles, planes and electronic equipment, were 9.3% lower in June than in May, Commerce Department data said Friday. Economists polled by The Wall Street Journal expected an 11.1% slump. The slowdown in orders offset some of the upwardly revised 16.5% rise of May, much of which came from Boeing orders. That was shown in transportation equipment new orders falling 22.4% in June compared with May, with orders for nondefense aircraft and parts down 51.8%. Excluding transportation, durable goods orders increased 0.2% in June.
5. RFK Jr. to Oust Advisory Panel on Cancer Screenings, HIV Prevention Drugs — Kennedy plans to dismiss all 16 panel members of the U.S. Preventive Services Task Force because he views them as too “woke,” the people said. The task force has advised the federal government on preventive health matters since 1984. The Affordable Care Act in 2010 gave it the power to determine which screenings, counseling and preventive medications most insurers are required to cover at no cost to patients. The group, made up of volunteers with medical expertise who are vetted for conflicts of interest, combs through scientific evidence to determine which interventions are proven to work.

The week ahead — Economic data from Econoday.com:

“There is a time to go long, a time to go short and a time to go fishing.” – Jesse Livermore

1. US Core CPI Rises Less Than Expected Again on Drop in Car Prices — the consumer price index, excluding the often volatile food and energy categories, increased 0.2% from May, according to Bureau of Labor Statistics data out Tuesday. On an annual basis, it advanced 2.9%. Goods prices, excluding food and energy commodities, rose 0.2% after stalling in the prior month. Categories that are more exposed to tariffs, including toys, furniture, appliances and apparel, showed strength, suggesting companies are starting to pass higher import costs on to consumers. Meantime, prices of new and used cars declined. However, the slew of below-forecast inflation readings raises questions as to how broadly President Donald Trump’s tariffs will impact consumer prices. Some companies have been able to shield customers by stocking up on inventories ahead of the levies or absorbing part of the higher costs at the expense of lower margins.
2. US Producer Prices Stagnated on Decline in Services Costs — the producer price index was unchanged from a month earlier, after an upwardly revised 0.3% gain in May, according to a Bureau of Labor Statistics report released Wednesday. US wholesale prices rose 2.3% from a year earlier, the least since September. Excluding food, energy and trade services, the PPI was also flat. It increased 2.5% from June of last year — the smallest annual advance since late 2023.
The PPI report follows June consumer price data that showed higher tariffs are filtering through into a variety of categories that include household furnishings, appliances and recreational goods. While inflation has been mild so far this year, many economists expect it to gradually build as more companies attempt to offset higher trade costs.
3. US Retail Sales Surge in Broad Advance — the value of retail purchases, not adjusted for inflation, increased 0.6% after declines in the prior two months, Commerce Department data showed Thursday. That exceeded nearly all estimates in a Bloomberg survey of economists. Excluding cars, sales climbed 0.5%. Ten out of 13 categories posted increases, surprisingly fueled by motor vehicle sales, which climbed after back-to-back declines. Administrative data showed car sales fell in June and prices for new and used vehicles were down in the latest inflation data, defying economists’ expectations for autos to weigh on the headline retail figure.

The week ahead — Economic data from Econoday.com:

“Amateurs think about how much money they can make. Professionals think about how much money they could lose.” – Jack Schwager

1. Trump Says Aug. 1 Tariff Deadline Won’t Be Extended — President Donald Trump said he would not offer any extensions to a new August 1 deadline for the implementation of increased tariffs on many goods imported into the US. Trump began notifying trading partners of the new rates on Monday ahead of what was initially a deadline this week for countries to wrap up trade negotiations with his administration. But the new letters, unilaterally setting duties on countries that had failed to reach deals, came alongside an executive order delaying the tariff date for three weeks, effectively giving trading partners an extension for talks. Trump also said Monday night that his Aug. 1 deadline was “not 100% firm” when speaking with reporters, indicating then that he could be swayed by offers of additional concessions.
2. Copper Market in Turmoil as Trump Touts 50% Tariff on US Imports — the plan, announced in an apparently off-the-cuff comment to reporters, marks the latest twist in a tumultuous period for industrial commodities, as the US leader aims to encourage more mining and smelting at home. He’s already raised fees on steel and aluminum imports, while probes into flows of multiple other metals are in train. Since February, when Trump first laid out plans for the levies, global traders have sent record volumes of the metal to the US, targeting huge profits on cargoes that can be delivered before the tariffs land.
3. US, India in Talks on Trade Deal That May Cut Tariff Below 20% — the US is working toward an interim trade deal with India that may reduce its proposed tariffs to below 20%, people familiar with the matter said, putting the South Asian nation in a favorable position against its peers in the region. The statement would likely set a baseline tariff below 20% — compared with 26% initially proposed — with language that would allow the two sides to continue negotiating the rate as part of the final pact, the people said. The timing of an interim agreement is unclear. If finalized, India would be on a short list of trading partners that have secured deals with the Trump administration. US President Donald Trump has otherwise shocked dozens of trading partners this week by announcing tariff rates of as high as 50% in some cases ahead of an Aug. 1 deadline.
4. Trump Administration Says Immigrants in Country Illegally Can’t Access Head Start, Other Programs — the Trump administration is blocking immigrants in the country illegally from accessing early-childhood education program Head Start and a slate of other federal benefits and programs, Health Secretary Robert F. Kennedy Jr. said. Under the new HHS guidance, anyone in the country illegally would be barred from Head Start and other programs and grants, including homelessness assistance, Title X family planning, substance-abuse treatment and mental-health services. Some of the affected programs generally don’t ask participants about immigration status and instead use income and other verification requirements to determine eligibility. The practical impact of the change is expected to be relatively small as immigrants without legal status don’t qualify for most federal benefits. In February, President Trump issued an executive order aimed at preventing immigrants without legal status from obtaining taxpayer-funded benefits and directed agencies to identify any relevant federal programs.
5. Trump Threatens 35% Tariff on Some Canadian Goods — The U.S. will put a 35% tariff on imports from Canada effective Aug. 1, President Trump announced on Thursday evening. Trump previously applied 25% tariffs to non-USMCA goods and the new rate, announced in a letter to Canadian Prime Minister Mark Carney and posted on social media, would mean that number rises to 35%, the official said. The U.S. and Canada had been involved in talks to lower tariffs ahead of a self-imposed July 21 deadline. Trump’s letter stands to derail Carney’s efforts to set a better tone with the U.S. Trump had clashed with Canada’s former Prime Minister Justin Trudeau, whom he mocked as “governor,” a reference to Trump’s desire to make Canada the 51st state. He has had a better relationship with Carney, referring to him as a “gentleman” and a “nice man.” But the warmer tone hasn’t yet achieved Carney’s goal of lowering U.S. tariffs that have already hurt Canada’s economy.

The week ahead — Economic data from Econoday.com:

“I AM A CONSISTENT WINNER BECAUSE: 1. I objectively identify my edges. 2. I predefine the risk of every trade. 3. I completely accept the risk or I am willing to let go of the trade. 4. I act on my edges without reservation or hesitation. 5. I pay myself as the market makes money available to me. 6. I continually monitor my susceptibility for making errors. 7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.”
― Mark Douglas

1. US Job Openings Unexpectedly Rise to Highest Since November — available positions increased by 374,000 to 7.77 million, according to Bureau of Labor Statistics data published Tuesday. That exceeded all estimates in a Bloomberg survey of economists. Vacancies in the hospitality sector accounted for three quarters of May openings. The finance, transportation and warehousing industries as well health care also saw more moderate gains. The May gain brought openings roughly in line with last year’s average. However, the increase was concentrated in one industry and openings in other sectors were more mixed. That suggests employers are growing cautious about expanding their staff while at the same time mostly holding onto their existing workers.
2. The private sector lost 33,000 jobs in June, badly missing expectations for a 100,000 increase — Private payrolls lost 33,000 jobs in June, the ADP report showed, the first decrease since March 2023. Economists polled by Dow Jones forecast an increase of 100,000 for the month. The May job growth figure was revised even lower to just 29,000 jobs added from 37,000. This week, the government’s nonfarm payrolls report will be out on Thursday with economists expecting a healthy 110,000 increase for June, per Dow Jones estimates. Economists are expecting the unemployment rate to tick higher to 4.3% from 4.2%. Some economists could revise down their jobs reports estimates following ADP’s data.
Weekly jobless claims data is also due Thursday, with economists penciling in 240,000. This string of labor stats comes during a shortened trading week, with the market closing early on Thursday and remaining dark on Friday in honor of the July Fourth holiday.
3. Trump Wins Broad Economic Policy Shift as House Passes Tax Bill — President Donald Trump secured a sweeping shift in US domestic policy as the House passed a $3.4 trillion fiscal package that cuts taxes, curtails spending on safety-net programs and reverses much of Joe Biden’s efforts to move the country toward a clean-energy economy. The 218-214 vote in the House Thursday sends the legislation to Trump, in time for a July 4 deadline he set. House leaders had to keep earlier procedural votes open for hours to convince a small band of holdouts to support the legislation.
The Senate also imposed deeper cuts in Medicaid health insurance for the poor and disabled, reducing spending on the program by nearly $1 trillion over the next decade, according to the CBO. Most clean-energy tax breaks passed under Biden are phased out and a popular $7,500 consumer tax credit for electric vehicles is eliminated for purchases made after Sept. 30.
The core of the bill is an extension of 2017 Trump tax cuts for individuals and pass-through businesses that were set to expire at the end of 2025. It also provides new resources for Trump’s crackdown on illegal immigration and for military spending including the president’s “Golden Dome” missile defense plan. A group of House Republicans from high-tax states such as New York, New Jersey and California won a temporary increase in the limit on the state and local tax deduction to $40,000. After five years, the cap will snap back to the current $10,000 limit originally imposed under Trump’s 2017 tax law.

The week ahead — Economic data from Econoday.com:

“The worse a situation becomes the less it takes to turn it around, the bigger the upside,” and “Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes” — George Soros

1. U.S. Home Price Growth Cools to Near-Two-Year Low — the S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the country, rose 2.7% in the 12 months to April, the slowest on-year appreciation since mid-2023 and cooling from 3.4% in March, data released showed. Mortgage rates continued at a mid-6% range throughout April, keeping monthly payment burdens near generational highs and pricing out significant segments of potential buyers, said Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. The data suggests affordability constraints have hit previously overheated markets hardest, while traditionally stable markets with more reasonable price levels are attracting renewed interest, Godec continued.
2. US GDP Revised Lower as Consumers Slash Services Spending — US consumer spending grew in the first quarter at the weakest pace since the onset of the pandemic on a sharp deceleration in outlays for a variety of services. Spending on services contributed 0.3 percentage point to gross domestic product in the first three months of the year, the least since the second quarter of 2020, according to Bureau of Economic Analysis figures published Thursday. That was down sharply from a previously reported 0.79 point boost. Overall consumer spending increased at a 0.5% pace, instead of the previously reported 1.2%. GDP declined at a downwardly revised 0.5% annualized rate in the first quarter as a result.
The numbers indicate the economy’s woes early in the year weren’t entirely related to the deterioration in the trade balance related to the Trump administration’s tariffs.
3. Economy Core Inflation Rate Rose to 2.7% in May, more than expected — The personal consumption expenditures price index, the Fed’s primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%. Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared with estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories. The annual rate was 0.1 percentage point ahead of the April reading. The Fed targets inflation at 2%, a level where it has not been since early 2021. Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared with the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%.
4. China’s Industrial Profit Declined in May — Industrial profit fell 9.1% year over year in May, tumbling from April’s 3.0% rise, data released by the National Bureau of Statistics showed Friday. The decline was due to multiple factors, including insufficient demand, falling prices of industrial products and short-term fluctuations, said Yu Weining, a statistician with the bureau. Hefty tariffs imposed by the U.S. on Chinese goods since April led to production at many factories being suspended till late May, when Beijing and Washington reached a truce in a trade war. China’s industrial profit fell 1.1% in the January-May period, reversing from a 1.4% increase recorded in the first four months, the statistics bureau said.