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New deadline for NAFTA could make for an interesting week in markets

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Earnings from several major retailers and monthly retail sales data put the focus on consumers in the week ahead, but the bigger market events could be developments on NAFTA trade talks and a parade of Fed speakers.

Trade could be very important, as House Speaker Paul Ryan has now sought a deadline of May 17 for word of a new North American Free Trade Agreement. He said Congress will need to be notified by then in order to approve it.

U.S., Canadian and Mexican trade officials held week-long talks through Friday, and their staff will be working through the weekend. Top negotiators said they would resume discussions again, ahead of Ryan’s Thursday deadline. U.S. Trade Representative Robert Lighthizer said the teams will remain “fully engaged,” but it is clear that differences remain.

“The most disruptive thing we could hear next week is negative news out of trade talks. … I still think NAFTA is more important than China now, and right now we have an artificial deadline,” said Art Hogan, chief market strategist at B. Riley FRB. “I think that’s going to dominate discussion next week.”

Strategists have said it would be a positive for markets if the NAFTA talks are concluded successfully with a revised agreement, since it ultimately may be an easier negotiation than the issues with China, particularly over intellectual property.

“I would have thought you would have been closer to a deal here, I think, particularly since this is the first and theoretically easiest of the lot. You then have China and everybody else,” said Hogan.

There are also appearances by a half dozen Fed officials, including San Francisco Fed President John Williams, who speaks Tuesday and Fed Governor Lael Brainard on Friday. St. Louis Fed President James Bullard appears on CNBC’s “Squawk on the Street” Monday at 10:30 a.m. ET.

“That’s the key. You’re going to have a saloon-full of Fed speakers that may give you some hint of how worried they are about inflation. Do they see it as up to their target?” said Art Cashin, director of floor operations at UBS.

Inflation data in the past week was weaker than economists expected, and that kept the debate going about whether the Fed will hike two or three more times this year. The core consumer price index, before energy and food, was up 2.1 percent over last year in April, above the Fed’s target of 2 percent. But the Fed’s preferred inflation measure, the PCE deflator, has remained below 2 percent.

Wall Street is fairly well divided over whether the Fed will raise interest rates once a quarter, as it has been doing, or just three times this year, as it has forecast.

Monthly retail sales should be the highlight of the week’s data Tuesday morning, and traders will also be looking for readings on consumer attitudes from Home Depot when it reports earnings Tuesday, Macy’s on Wednesday and Walmart on Thursday.

The focus will also remain on geopolitical events, after President Donald Trump withdrew the U.S. from the Iranian nuclear agreement in the past week. Exiting the deal leaves the U.S. at odds with Europe and other parties to the deal, who will try to keep it in place. It may also increase tensions in the Middle East, which are already boosting oil prices.

West Texas Intermediate crude futures ended the week up 1.4 percent, at $70.70 per barrel, for the fourth positive week in five.

There will also be attention on upcoming talks between Trump and North Korean leader Kim Jong Un in Singapore next month.

“I think when he gave up the hostages that made a big difference,” said Cashin, of the release of three Americans by North Korea in the past week.

Cashin said while the headlines should look positive for Trump and the markets, the winner, if there is an agreement on North Korea’s nuclear weapons, will be China.

“[Chinese President] Xi [Jinping] will have bigger influence on South Korea and bring them into his orbit,” said Cashin.

Stocks in the past week racked up solid gains, sparked by a revival in tech names after earnings. The S&P 500 was up 2.4 percent to 2,727 and is now positive for the year again, with a 2 percent gain.

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Biden heads into inauguration with a stock market tailwind

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Biden heads into inauguration with a stock market tailwind

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Biden to deploy FEMA, National Guard to set up Covid vaccine clinics across the U.S.

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Spc. Katherine Deskins (L) of the Nevada Army National Guard administers a Moderna COVID-19 vaccination to Clark County Fire Department Capt. Jasmine Ghazinour on the first day of Clark County’s pilot vaccination program at Cashman Center on January 14, 2021 in Las Vegas, Nevada.

Ethan Miller | Getty Images

President-elect Joe Biden plans to use FEMA and the National Guard to build coronavirus vaccine clinics across the United States, according to new details of his Covid-19 vaccination plan released by his transition team on Friday.

The Biden administration will also “quickly jumpstart” efforts to make the vaccines available at local pharmacies across the U.S., which should ensure that Americans have access to doses at facilities only miles from their home, according to the plan. 

“Here’s the deal: The more people we vaccinate, the faster we do it, the sooner we can save lives and put this pandemic behind us and get back to our lives and loved ones,” Biden said at a speech in Wilmington, Delaware, Thursday night. “We won’t get out of it overnight and we can’t do it as a separated nation.”

Drug store chains and pharmacies were supposed to take on a larger role in distributing the vaccine once the government expanded access to more people. But the slower-than-expected rollout has frustrated pharmacy chains. The National Association of Chain Drug Stores called on the federal government earlier this week to allow states to send more doses directly to pharmacies as they do with hospitals and health departments. 

The group estimated that the country’s retail pharmacies could administer at least 100 million doses of vaccines each month, which would exceed the incoming administration’s promise of 100 million shots in 100 days.

The Biden administration has said current vaccination efforts are not sufficient to quickly and equitably vaccinate the vast majority of the U.S. population, adding, “We must ensure that those on the ground have what they need to get vaccinations into people’s arms.”

The pace of vaccinations in the U.S. is going much slower than officials had hoped. As of Friday at 6 a.m. ET, more than 31.1 million doses of vaccine had been distributed across the U.S., but just over 12.2 million shots have been administered, according to data compiled by the Centers for Disease Control and Prevention.

According to the plan, Biden will also invoke the Defense Production Act to “maximize the manufacture of vaccine and vaccine supplies for the country.”

The incoming president’s advisors had previously hinted that he would invoke the wartime production law, which allows the president to compel companies to prioritize manufacturing for national security, to bolster vaccine production.  

The plan says the act will increase the supply of necessary equipment that could otherwise cause bottlenecks in the vaccine’s rollout if they were in shortage, including glass vials, syringes, stoppers and needles. It will also increase the capacity to package the vaccines into vials.

This is a developing story. Please check back for updates.

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