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Markets Await Economic Data

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We’ve got a big week of new economic data hitting the tape throughout the week, but it doesn’t get started in earnest until Tuesday morning. We look for May reads on Retail Sales, PPI, Industrial Production & Capacity Utilization and Housing Starts & Building Permits. Empire State and Philly Fed surveys for June are also expected.

And, as always, the Thursday morning Initial and Continuing Jobless Claims. Don’t forget Wednesday’s press conference with Fed Chair Jay Powell. It will be a full plate.

Pre-market activity is pretty much where we’ve seen it for the past week or so: somewhat of a bias for tech/growth, while cyclicals are stagnant or selling slightly. The Dow looks to open -35 points at this hour, while the S&P 500 is flat currently. The Nasdaq is +20, looking for its fifth-straight up-week. The Dow and S&P are running three-week winning streaks.

Since the soft ending to Q1 earnings season, we’ve been a bit on “summer hours,” trading-wise of late. The market has been nicely disciplined in not running too hot or cold since the initial throes of the “Great Reopening” began a couple months ago.

This, with plenty of questions left unanswered: is our current inflation scenario transitory or more permanent? with a sub-70% vaccination rate nationwide, are we really beyond the Covid pandemic? what, if anything, will happen with an Infrastructure Package?

On Capitol Hill, the bipartisan Problem Solvers Caucus — yes, believe it or not, Republicans and Democrats are actually working together — are proposing a compromise Infrastructure Package, splitting the difference between the big-spending Biden White House plan and the much more diminutive GOP structure. At $1.25 trillion overall ($959 billion over the first eight years), it’s heavy on things like road repair but does not include things like broadband or child care.

In an effort not to let politics destroy attempts of elected lawmakers to provide needs to the American public, the compromise solution offers more than $800 million to fix roads, bridges, airports and waterports, with around $200 billion allotted toward energy, water, telecomm and veterans’ housing. Much of this plan addresses infrastructure that is badly in disrepair after decades of neglect. It also throws a bone to climate change initiatives like wind, solar and even grants $25 billion to electrical vehicles.

Will it be enough to pass a calcified, bifurcated Congress? That’s the $64 million (or “billion”) question. But if a compromise were to be hashed out, it would provide further stimulus to the U.S. labor force in addition to increasing safety and accommodation in modernizing our transportation throughways. This, in turn, may suggest that a bipartisan Congress may materially improve our American lives, and turn our so-far “Good” Reopening to a “Great” one.

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