Week of July 30, 2021 Weekly Recap & The Week Ahead
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:
