EQUITY TECHS: E-MINI S&P: (U5) Remains Above Support

The House Republican Study Committee will host GOP staff on Wednesday for a discussion on crafting a second megabill, according to an invite seen by Politico. 

• Politico notes: “The briefing will be held in-person, and aides will hear from leaders of the Economic Policy Innovation Center, a conservative think tank, including executive vice president Brittany Madni, director of budget policy Matthew Dickerson and senior analyst in fiscal policy David Ditch.”
• RSC Chairman August Pfluger (R-TX), told Fox News last month: "We must capitalize on the momentum we’ve generated in the first 6 months of a Republican trifecta in Washington. To fulfill the promises we made to the American people, conservatives must begin laying the groundwork for the second reconciliation bill to ensure we continue to drive down the cost of living and restore America’s promise for future generations."
• House Speaker Mike Johnson (R-LA) said last month: "...the big beautiful bill was the first big step in that. But we have multiple steps ahead of us. We have long planned for at least two, possibly three, reconciliation bills, one in the fall and one next spring."
• A maximum of three reconciliation bills are permitted per fiscal year, per Senate rules. Considering the likelihood of Democrats winning the House in the 2026 midterms, Republicans are likely to pursue one additional reconciliation package on a similar timeline to the ‘One Big Beautiful Bill'. 

July's full-month retail sales came in at 5.4% Y/Y per the Johnson Redbook retail sales index, following a  6.5% Y/Y rise in the final week of the retail month (to Aug 2). 

• While more details will be available on Wednesday after the same-store sales index is released, it appears as though July continued a string of robust Redbook sales (6 months consecutive, and 11 in 12, above 5% Y/Y).
• Additionally, Redbook's preliminary forecast for August is for 5.8% Y/Y sales.
• Current estimates for Jul Census Bureau retail sales (out Aug 15) is for 0.5% M/M gains after 0.6% in June, which would put Y/Y sales in the high 3% Y/Y area.
• The Redbook report's anecdotals point to promotions and sales tax holidays as having boosted late July sales: "shoppers took advantage of annual sales tax holidays for school supplies and clothing in Arkansas, Florida, Iowa, New Mexico, Ohio, South Carolina, Tennessee, Virginia, and West Virginia. Retailers also provided a variety of promotions, both in stores and online. Meanwhile, some major retailers are facing a nationwide boycott organized by People’s Union USA, which began on August 1st and will continue throughout the month."

There weren’t any major surprises in the final goods & services trade data for June as last week’s surprisingly small goods deficit in the advance report had already set the tone. US trade deficits with both the EU and China narrowed further, with the goods deficit to China of 0.6% GDP in Q2 the lowest quarterly deficit since at least 2009. 

• The goods & services trade deficit was close to expectations in June at $60.2bn (cons $61bn) after a near unrevised $71.7bn (initial $71.5bn) in May, after last week’s advance release just for goods had suggested similar.
• The goods & services deficit was equivalent to 2.5% GDP in Q2 after 5.2% GDP in Q1. That’s vs 3.4% GDP in Q4 or 3.1% GDP across 2024. Swings have come entirely from the goods deficit whilst the services surplus has been steady around 1.0% GDP.
• These low recent deficits are payback from the huge deficits of Dec and Q1 driven by tariff front-running, primarily gold and then pharmaceutical products.
• The goods deficit with the EU has narrowed to 0.7% of US GDP in Q2 vs 1.4% GDP in Q1 and 0.8% GDP in Q4, whereas the goods deficit with China has narrowed to 0.6% GDP in Q2 vs 1.1% GDP in Q1 and 1.0% GDP in Q4.
• Today’s details also show that June’s latest moderation in deficits, a surprise at the time of the advance release, was indeed driven by pharmaceutical imports (-36% M/M). At $17.1bn in June, pharma imports fell from $26.7bn in May as they continued to retrace from a huge peak of $50.2bn in March, having averaged $20.5bn in 2024 for context.
• Ireland has contributed heavily to these pharma flows (all imports from Ireland halved in June to $6.7bn) but imports from EU ex Ireland also eased from $42.7bn to $38.7bn (second lowest since mid-2022 for a nominal measure). This is down from $42.9bn in December.
• Imports from China saw a smaller decline on the month but have seen a more pronounced trend decline under the second Trump administration, most recently at $19.4bn in June after $20.9bn in May and $37.3bn in December.
• Exports have increased strongly over that period to the EU but less so for China. Exports to the EU increased to $35.8bn in June from $33.5bn in May and $30bn in Dec, whilst exports to China increased to $10.1bn from a particularly low $6.9bn in May (as trade flows slowed significantly in lagged response to policies that essentially halted trade between the two countries) and $11.5bn in Dec.