House Speaker Kevin McCarthy (R-CA) poses for photos with students from North Carolina in Statue Hall as he walks to his office at the U.S. Capitol May 15, 2023 in Washington, DC.
Drew Angler | Getty Images News | Getty Images
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Washington’s brinkmanship over the country’s debt ceiling continued for another day.
what you need to know today
- Atlanta Fed President Rafael Bostic told CNBC he doesn’t expect the Fed to cut rates this year, even if there’s a recession. Instead, Bostic said he favored “further increases rather than cuts” because he believed “inflation has remained high.”
- Billionaire hedge fund manager Paul Tudor Jones struck a different tone when he said he was confident the Fed wouldn’t raise interest rates again because “the CPI … has (had) fallen for 12 straight months.” Jones told CNBC that as the With the Fed on hold, the stock market could “continue to rise this year.”
- European Union regulators approved Microsoft’s $69 billion acquisition of gaming company Activision Blizzard, subject to redress for cloud gaming, a way to stream games over the internet. The regulator said Microsoft will allow consumers to stream Activision games on any cloud gaming platform.
- Warren Buffett’s Berkshire Hathaway has made changes to its stock portfolio, a new regulatory filing shows. Highlights include: It added a new stake in Capital One Financial, sold US Bancorp and added to its stake in Apple.
the bottom line
Washington’s brinkmanship over the national debt ceiling continued for another day, even as Treasury Secretary Janet Yellen reiterated it in a statement. notes On Monday, the US could default on its debt “as early as June 1.”
Still, there are signs that progress is being made.Yellen said that in Interviewed by The Wall Street Journal On Saturday, she was hopeful and “told (legislators) that some consensus has been found.” Likewise, President Biden expressed optimism for a deal with Republicans to raise or suspend the debt ceiling.
However, House Speaker Kevin McCarthy is not hopeful. Democrats are not serious about negotiating, he told NBC News. “The way I see it, they don’t want to make a deal yet,” McCarthy said.
In short, the back-and-forth battle remains. “It’s a waiting game,” said Keith Buchanan of Globalt Investments. “Every day that goes by, every delay, every day of no progress … I think it’s going to be harder and harder for the market to really gain any traction.”
In fact, while the major stock indexes were all up on Monday, they moved very little. The S&P 500 rose 0.3%, the Dow Jones Industrial Average rose 0.14%, snapping a five-day losing streak, and the Nasdaq Composite rose 0.66%.
We saw the same positive movement on low volume in regional bank stocks. For example, Zions Bancorp rose 8.5 percent and Comerica rose 7.3 percent, even though their trading volumes were below their 30-day average. Of course, that’s not necessarily a bad thing — any gains in regional bank stocks would be welcome news amid uncertainty in the sector.
One area where corporate America seems more certain is inflation.According to the data, only 278 S&P 500 companies mentioned inflation in their first-quarter earnings calls FactSet data“This is the standard for references to ‘inflation’ on earnings calls since the second quarter of 2021,” John Butters, vice president and senior earnings analyst at FactSet, wrote in a note Monday. The smallest number among the top 500 companies in Poole.”
Biden will meet with congressional leaders today to continue discussions on the debt ceiling. Investors are hoping U.S. lawmakers will calm lingering fears.
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