The big economic highlight on Wednesday will be the May report on pending home sales, which is expected to show a rebound after a drop in April.
On Tuesday, markets contended with a pair of comments from Fed officials that are unlikely to make those who know market history all that excited. Fed Chair Janet Yellen, speaking in London, said, “Would I say there will never, ever be another financial crisis? […] You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.”
The contrarian read being that when someone starts talking about how there won’t likely be a financial crisis, there’s going to be a financial crisis. Elsewhere in her comments Tuesday, Yellen said the Fed would look to be contrarian in identifying risks to the economy.
Also in Fedspeak, in an interview that aired Tuesday San Francisco Fed president John Williams said, “The stock market seems to be running pretty much on fumes… It’s something that clearly is a risk to the U.S. economy, some correction there — it’s something we have to be prepared for to respond to if it does happen.”
Williams added that he is “somewhat concerned” about the low level of volatility we’re seeing in markets.
And while we wrote on Monday that some analysts see stock valuation measures of signs that the stock market is not entering bubble-like territory that was seen before the tech crash, as we push into the ninth year of the post-crisis rally, time seems to be working against markets.
Markets and economic expansions, however, do not die of old age. They die when households and corporations cannot service their debts.
The real move in markets, which mostly concentrated in the tech sector, happened during the afternoon when headlines indicated that Senate leaders would postpone a vote on its bill to replace the Affordable Care Act until after the July 4th recess.
And while tech stocks — namely the FAAMG stocks of recent fame — were hardest-hit, these stocks, like legislative progress, are both highly sensitive to market sentiment.
Because while investors have long-ago bailed on betting specifically on any of Trump’s plans to invest in infrastructure and cut taxes, a real piece of legislation moving through Congress did, perhaps, offer some hope that this agenda would be back in play.
But with yet-another snag hit on the way towards something getting done in Washington, D.C., investors perhaps recalled that when it comes to legislation, there’s not much to look at right now.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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