“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:

…“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:

“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. States Announce $26 Billion Settlement to Resolve Opioid Lawsuits — the nation’s three largest drug distributors— McKesson Corp. , AmerisourceBergen Corp. , and Cardinal Health Inc.—and drugmaker Johnson & Johnson have been negotiating the deal for more than two years, but recent s announcement signifies an important milestone that could clear the way for money to be received by states as soon as early next year. An opioid crisis that has claimed half a million lives in the U.S. has triggered more than 3,000 lawsuits filed by states, local governments, Native American tribes, hospital groups and others against players in the pharmaceutical industry. The lawsuits allege drugmakers pushed their painkillers for uses far beyond what was medically necessary and that distributors and pharmacies didn’t do enough to halt masses of pills from flowing into communities.
2. Senate Republicans Block Infrastructure Bill but Talks to Continue — Senate Republicans blocked an effort to begin debate on a bipartisan infrastructure deal still under negotiation Wednesday, but lawmakers said they expected to close in on a final agreement by early next week. The infrastructure bill has been mired in disagreements over how to find sources of revenue to offset its cost. The bill is expected to spend roughly $600 billion over projected federal spending on roads, bridges and broadband access, among others. Over the weekend, lawmakers agreed to drop a provision disliked by Republicans to raise money by beefing up the Internal Revenue Service’s collection of unpaid taxes.
3. U.S. Vaccine Panel Signals Preliminary Support for Covid-19 Booster Shots — a work group of the Advisory Committee on Immunization Practices panel also endorsed the continued use of J&J’s vaccine, despite a recent warning about a low risk of a rare neurological disorder among people taking the shot. About 2.7% of adults in the U.S. are considered immunocompromised, according to the CDC, including transplant recipients, some cancer survivors and people living with HIV. That makes them less responsive to vaccines, which require stimulation of the immune system to provide protection.
4. Intel CEO Says Chip Shortage Could Stretch Into 2023 — The world-wide shortage has fueled rising prices for some consumer gadgets. Meanwhile, the auto industry has been particularly hard-hit as the lack of a key component causes production delays. German car maker Volkswagen AG VOW -1.89% this month warned the global shortage could worsen over the next six months. Others have said they were bracing for problems through next year. Supply shortages should start showing signs of easing later this year, Mr. Gelsinger said, echoing comments from Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker. TSMC last week said the chip shortage that has hampered car makers could start to ease in the next few months after it ramped up its production of auto chips. TSMC and Intel are adding new chip-production plants, though some of that capacity won’t be ready for about two more years.

The week ahead — Economic data from Econoday.com:

“But most investors do capitulate eventually. They simply run out of the resolve needed to hold out. Once the asset has doubled or tripled in price on the way up — or halved on the way down — many people feel so stupid and wrong, and are so envious of those who’ve profited from the fad or side-stepped the decline, that they lose the will to resist further. My favorite quote on this subject is from Charles Kindleberger: “There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich” (Manias, Panics, and Crashes: A History of Financial Crises, 1989). Market participants are pained by the money that others have made and they’ve missed out on, and they’re afraid the trend (and the pain) will continue further. They conclude that joining the herd will stop the pain, so they surrender. Eventually they buy the asset well into its rise or sell after it has fallen a great deal. In other words, after failing to do the right thing in stage one, they compound the error by taking that action in stage three, when it has become the wrong thing to do. That’s capitulation. It’s a highly destructive aspect of investor behavior during cycles, and a great example of psychology-induced error at its worst.” ― Howard Marks

1. U.S. Consumer Prices Jump Most Since 2008 — the consumer price index jumped 0.9% in June and 5.4% from the same month last year, according to Labor Department data released Tuesday. Excluding the volatile food and energy components, the so-called core CPI rose 4.5% from June 2020, the largest advance since November 1991. Used vehicles accounted for more than a third of the gain in the CPI, the agency said. The outsize increase was also driven in large part by the pricing rebound in categories associated with a broader reopening of the economy including hotel stays, car rentals, apparel and airfares.
2. Senate Democrats Agree on $3.5 Trillion Infrastructure Bill — Senate Majority Leader Chuck Schumer announced that Democrats on the Senate Budget Committee and White House officials had clinched a deal on a $3.5 trillion investment plan. The proposal notably includes a significant expansion of the Medicare healthcare program for the elderly as well as major spending on education, child care, and the fight against climate change. The deal would come on top of a separate bipartisan infrastructure bill currently being discussed that would add some $600 billion of new spending to invest in roads, bridges, and broadband connections.
3. CDC says deaths on the rise again after weeks of decline — “After weeks of declines, seven-day average daily deaths have increased by 26% to 211 per day,” Dr. Rochelle Walensky said during a press briefing. New cases are also on the rise, with a current seven-day average of 26,300 cases, according to the CDC. That is an increase of roughly 70% from the seven day average last week. The seven-day average for hospitalizations is now at 2,790, up about 36% from a week ago after weeks of decline. Reflecting on the new numbers, Walensky said the pandemic has now become a “pandemic of the unvaccinated.” The five states with the highest case rates, Arkansas, Florida, Louisiana, Missouri and Nevada, all had a higher rate of new vaccinations compared to the national average.
4. Biden’s Hong Kong Warning Sends Message to Companies, China — The Biden administration warned investors about the risks of doing business in Hong Kong, issuing an advisory saying China’s push to exert more control over the financial hub threatens the rule of law and endangers employees and data. The U.S. warning singles out the Hong Kong’s National Security Law, imposed on the territory by Beijing last year, as a key concern. It said the vaguely-worded legislation has been used to justify the arrest of foreign nationals, including a U.S. citizen, to undermine data security, and to allow warrantless electronic surveillance.

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. Fed Officials See Earlier End for Bond Buying — Fed officials discussing the matter at their June 15-16 policy meeting weren’t ready to reduce their $120 billion in monthly purchases of Treasury and mortgage securities, according to minutes of the gathering released Wednesday. The minutes offer a strong sign officials will ramp up more formal deliberations at their next meeting, July 27-28, over when and how to reduce the bond buying. Officials generally judged that, “as a matter of prudent planning, it was important to be well positioned to reduce the pace of asset purchases, if appropriate, in response to unexpected economic developments, including faster-than-anticipated progress” toward the Fed’s inflation and employment goals or risks of too much inflation.
2. Tokyo Olympics to Ban Spectators in City as Virus Resurges — the Tokyo Olympics will ban domestic spectators in events held in Japan’s capital, revising an earlier decision to allow some fans, as the resurgence of virus cases pushed the government to declare a state of emergency in the city. The decision, announced by Olympic Minister Tamayo Marukawa, comes after Japanese Prime Minister Yoshihide Suga declared a fourth state of emergency for Tokyo, running from July 12 through Aug. 22. It’s a reversal from a decision last month to limit the number of spectators at either 10,000 or 50% of venue capacity, whichever is smaller.
More than half of the 43 Olympic and Paralympic venues, including the 68,000-capacity National Stadium that’s set to host the opening ceremony on July 23, are located in Tokyo. Organizers had said that a no-spectator scenario was possible, depending on the virus situation. A decision to bar fans from overseas was announced in March.
3. Biden to Target Railroads, Ocean Shipping in Executive Order — the Biden administration will push regulators to confront consolidation and perceived anticompetitive pricing in the ocean shipping and railroad industries as part of a broad effort to blunt the power of big business to dominate industries, according to a person familiar with the situation. The administration says the relatively small number of major players in the ocean-shipping trade and in the U.S. freight rail business has enabled companies to charge unreasonable fees. The STB proposed a competitive switching rule in 2016 but hasn’t yet acted on it. “The consolidation brought about much-needed rationalization in the system 25 years ago, but the net result is a lot of shippers who are subject to a market-dominant railroad,” said a government official briefed on the White House’s proposal for the STB.
4. Biogen Faces FDA Probe of Alzheimer’s Drug Approval — the head of the U.S. Food and Drug Administration said she is seeking a federal investigation of the approval of the Biogen Inc. Alzheimer’s disease drug Aduhelm, a highly unusual step that will increase scrutiny of a heavily criticized clearance. Aduhelm was granted approval by the FDA last month over the objection of outside scientific advisers who had voted against the drug last November. The agency ordered Biogen to do an additional trial to confirm that the therapy benefits patients, and given nine years to produce data.

The week ahead — Economic data from Econoday.com:

“Skepticism and pessimism aren’t synonymous. Skepticism calls for pessimism when optimism is excessive. But it also calls for optimism when pessimism is excessive.”
― Howard Marks

1. Costly New Alzheimer’s Drug Could Force Medicare to Restrict Access — Biogen Inc. priced the drug Aduhelm at $56,000 a year. Wall Street analysts estimate it could eventually surpass $5 billion in yearly sales, mostly paid by Medicare, while some health economists warn the bill would be multiples higher.
Medicare normally pays unconditionally for approved medicines. To limit the financial hit from Aduhelm, however, Medicare could restrict access, former U.S. health officials and health-policy experts said. Aside from the medicine itself, there is the cost of infusing the drug, brain-imaging tests and doctor visits, said Scott A. Small, director of Columbia University’s Alzheimer’s Disease Research Center. The total cost will approximate $100,000 annually per patient, he said. Paying for the treatment will largely fall on Medicare, which provides health insurance to people 65 years and older and covers most of the six million Americans with Alzheimer’s.
2. United Airlines Bets on Post-Pandemic Growth With Its Biggest Ever Jet Order — the Chicago-based airline said last week that it will purchase 200 of Boeing Co. BA +0.40% ’s 737 MAX jets and 70 larger Airbus EADSY -1.53% SE A321neos, a deal valued at more than $30 billion at list prices before customary discounts. United is looking to replace most of its 50-seat jets and other smaller, older aircraft with these larger planes that can carry more passengers and allow it to sell more premium seats. United’s move follows recent jet orders from carriers including Southwest Airlines Co. and Alaska Air Group Inc. The recovery has helped Boeing clear most of its inventory of unclaimed MAX jets. United had previously unveiled plans to buy an additional 25 MAX jets and to accelerate delivery of dozens more to meet near-term demand, but the carrier said the orders unveiled Tuesday are part of a more detailed post-pandemic strategy. United said the new planes would help it add almost 30% more seats per domestic flight and 75% more premium seats in first class or with extra legroom.
3. Robinhood’s Luster Stained Again With a Record $70 Million Fine — Financial Industry Regulatory Authority fines almost $70 million from the brokerage in a record settlement Wednesday, including a $57 million fine and about $12.6 million in payments to aggrieved customers. It follows Robinhood’s meteoric rise against the backdrop of the Covid-19 pandemic and the frenzy over hot stocks such as GameStop Corp. that warped the realm of retail trading. The agency accused Robinhood of misleading customers, having weak technology oversight and allowing thousands of users to trade options even though they may not have been suitable candidates, among other infractions.
4. Fed’s Harker Supports Start of Bond Buying Pullback Later This Year — Federal Reserve Bank of Philadelphia President Patrick Harker said Thursday that while an interest rate rise lies some ways in the distance, he is ready for the U.S. central bank to begin slowing the pace of its asset buying stimulus this year. Officials have been focused on what to do with their $80 billion a month in Treasury bond buying and $40 billion a month in mortgage bond purchases. At the FOMC meeting last month, Fed Chairman Jerome Powell acknowledged officials are discussing pulling back on the support but offered no details for when, or how, that might play out.

The week ahead — Economic data from Econoday.com: