President Joe Biden gives a brief update on the ongoing debt ceiling negotiations in the Roosevelt Room of the White House on May 17, 2023 in Washington, DC.
Chip Somodevilla | Getty Images News | Getty Images
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The good news: Biden will meet with McCarthy later today to discuss the debt ceiling, after negotiations stalled over the weekend. The bad: There’s no telling how to proceed with the talks.
What you need to know now
- US President Joe Biden and House Speaker Kevin McCarthy are meet at the White House Monday to resume debt ceiling negotiations, NBC News reported. At the end of the week, discussions stopswith McCarthy telling reporters that talks would not resume until Biden returned from the Group of Seven summit in Japan.
- US stocks falls on Friday as investors worried about delays in a deal on the debt ceiling, contrary to their optimism earlier in the week. Asia-Pacific markets opened the week higher. China’s Shanghai Composite rose 0.1% as shares of Chinese chipmakers rose after the country banned operators of critical infrastructure from buying products from US-based chip competitor Micron.
- iRO Analysts consider that stocks may rise even in the second half of the year – if three conditions are met. Economic data coming out this week, including May’s PMI Composite, Fed meeting minutes and GDP numbers, will make it clearer if markets can rally.
The bottom line
The Writers Guild of America may be on strike right now, but we’re not short of riveting drama — in the form of the US debt ceiling negotiations.
It’s a good thing the markets were closed over the weekend, or they might have fallen on McCarthy’s comments can’t continue until Biden returns to the country. Investors were already scared on Friday after their optimism disappeared when the Republican negotiators came out of the discussion. The S&P 500 fell 0.14%, the Dow Jones Industrial Average lost 0.33% and the Nasdaq Composite fell 0.24%.
To be sure, those aren’t big leaks, suggesting investors think Washington will finally reach a deal — as it were. Fed Chair Powell’s comments that rates don’t need to be high also cheered investors. the CBOE Volatility Index, which measures investors’ expectations of where the S&P will move over the next 30 days, traded at 16.8 Friday. That’s close to the 52-week low, indicating stability and calmness.
In fact, the major indexes had a good week. The S&P added 1.65% and the Nasdaq rose 3% for the week – their best performance since March.
However, that was before McCarthy turned the rhetoric on the debt ceiling negotiations. The good news is that Biden will meet with McCarthy in person today. The bad: There’s no telling how to proceed with the talks.
Detours and divisions are perhaps inevitable when it comes to White House negotiations across the political spectrum. We can only have faith that the US will not collapse its own economy, and the financial world DISPUTE. That’s a scenario that belongs on television, not the real world.
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