That's where we've gone with Q2 all but completed and that's a shame when we were just kissing all-time highs a couple of weeks ago but it's all evaporated since then though it has not been bad for our portfolios (See Friday's Reviews) – as we were pretty skeptical of the rally. We didn't get more bearish as we think 33,000 should hold up on the Dow for at least a bounce and, falling from 35,000 is a 2,000-point drop so we expect 400-point bounces to 33,400 (weak) and 33,800 (strong). If we fail to take back and hold 33,800, THEN we may have a serious problem but the Futures are already giving us a weak bounce on pretty much zero volume (so meaningless).

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The S&P 500 is still up 4% from March's close and that's more meaningful than the Dow. The Nasdaq was at 13,300 and now 14,100 so 800 points is 6% higher than we were on April Fools Day while the Russell is actually a bit lower than it was. So mixed signals from the majors and mixed signals in other Global Markets are not what you expect from a record-high market yet, so far, no sell-off has gone unrebounded – we'll just have to keep our eye on the data to figure out what's coming next.

While most people are expecting a strong 2nd half rebound in the economy (Q1 was 6.4% better than last year), 5% of that is inflation and strains are already showing on the other 1.4%. Case in point: American Airlines (AAL) cancelled about 120 flights on Saturday and 176 on Sunday (about 6% of its mainline operation that day). While some were called off a few days in advance, about half of those were because of "unavailable flight crews."

"The bad weather, combined with the labor shortages some of our vendors are contending with and the incredibly quick ramp up of customer demand, has led us to build in additional resilience and certainty to our operation by adjusting a fraction of our scheduled flying through mid-July," American Airlines spokeswoman Sarah Jantz said in a statement.

There are parts shortages (chips and other items) as well as the supply chains are still nowhere near back to normal but labor is a huge issue for Airlines, who have been racing to train the aviators they furloughed as the two federal coronavirus aid packages that prohibited layoffs. They are also trying to catch up with their pilots, who are due for periodic training. There are limits on growth, no matter how much demand improves – this is how we end up getting inflation – as people are forced to bid up the price of scarce resources.

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Likewise this morning's Chicago Fed National Activity Index, which tracks 85 monthly indicators, was a big miss at 0.29 (0.58 expected) and that's up from a big miss of -0.09 last month – where is the growth? Oh that's right – INFLATION! Thank goodness for that or we'd have no growth at all. Well, thank goodness for that and $6Tn worth of stimulus in the past 6 months. Well, thank goodness for those thing plus the $120Bn worth of assets the Fed is buying each month. Oh, and the bonus unemployment money – that too. Otherwise – this wouldn't look so hot….

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You would think Earnings would be over but they are never over and now we have the final reports of Q2 straggling in. Still some significant companies like FDX, KMX, KBH, NKE and CCL reporting and we'll be very interested in PLUG and WGO.

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On the calendar, Thursday's GDP is just a revision and there's no Fed speek but there are note auctions (we need to borrow A LOT of money), so hopefully they go well and we have Existing Home Sales and the Richmond Fed tomorrow, PMI and New Home Sales Wednesday, Durable Goods Thursday is likely to disappoint and we'll get that with Wholesale and Retail Inventories along with the Kansas City Fed Report. Friday is Personal Income and Outlays along with the last Consumer Sentiment Report before they pull the plug on Unemployment Bonuses and Mortgage Forbearance – so things will be hot in July if the Administration doesn't push through some extensions.

Calendar June 21 2021

It's all about the bounces this week – we'd better get strong ones!