Investors have been following the on-again-off-again talks between the White House and Congress over raising America’s debt limit, with the potential of a facing a default looming as early as June. The worry as the deadline gets closer is a rise in debt costs and threats to Social Security benefits. Markets have started showing early signs of stress, with five-year credit default swaps on US debt hitting the highest price since 2012, and demand for short-term US Treasury bills maturing this summer ticking down.
In a bid to encourage investors to add their voice to the debate, Speaker of the House Kevin McCarthy appeared at the New York Stock Exchange this week. His message was that a US default could have dire consequences for millions of Americans, and that investors should demand a responsible debt ceiling and agreement that brings spending under control.
Earnings season has also been underway, with S&P 500 companies well on their way to their best start to an earning season since 2012. This trend has bucked some of the gloomiest predictions of a crushing earnings recession and a painful stock market sell-off, despite some of Wall Street’s biggest bears insisting that more pain is in store.
However, many eye-catching companies are still due to report first-quarter results this week, including Tesla, Morgan Stanley, and IBM. Goldman Sachs has also recommended a list of 21 stocks that prioritize big dividends and buybacks, which they believe could be the best-performing stocks in a slowing economy.
It is worth noting that America’s debt limit has been a rather frequent dilemma, and Wall Street thought they found a potential solution a decade ago, suggesting that the country should simply go ahead and default. It is still too soon to say what will come of this current debt ceiling impasse — lawmakers are yet to strike a deal before the deadline.
Company: The company mentioned in this article is Goldman Sachs. Goldman Sachs is a multinational investment bank and financial services company, headquartered in New York City. The bank provides services all over the world in mergers and acquisitions, asset management, foreign exchange, wealth management, and securities services, among others. It has been part of some of the largest financial deals in history, including the initial public offering of Apple in 1980.
Person: The person mentioned in this article is Kevin McCarthy, the Speaker of the House of Representatives. McCarthy is a Republican Representative from California and has served in the House since 2007. He was elected the House’s Republican leader in 2014, and then later elected House Majority Leader and Speaker of the House in 2019. Along with his position and connections in Congress, McCarthy has also become an advocate for investor’s rights in Congress and has urged investors to add their voices to the debt ceiling negotiations.
