President Joe Biden delivers a brief update on 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 in person later today to discuss the debt ceiling after a break in negotiations over the weekend. The bad: There’s no telling how the negotiations will go.
- US President Joe Biden and House Speaker Kevin McCarthy will meet at the White House on Monday to resume talks on the debt ceiling, NBC News reported. Over the weekend, discussions stalled, with McCarthy telling reporters that talks could not resume until Biden returned from the Group of Seven summit in Japan.
- US stocks fell on Friday as investors worried about delays in a deal on the debt ceiling, contrasting with their optimism earlier in the week. Asia-Pacific markets opened the week higher. China’s Shanghai Composite rose 0.1% as shares in Chinese chipmakers rose after the country barred key infrastructure operators from buying products from U.S. chip rival Micron.
- PRO Analysts believes shares can rise even higher in the second half of the year – if three conditions are met. Economic data coming out this week, including the corn PMI Composite, minutes from the Fed meeting and GDP numbers, will make it clearer if markets can rally.
The Writers Guild of America may be on strike now, but we’re not short of gripping drama – in the form of the US debt ceiling negotiations.
It’s a good thing markets were closed for the weekend, otherwise they likely would have fallen on McCarthy’s comments that negotiations could not resume until Biden returns to the country. Investors were already spooked Friday after their optimism faded as Republican negotiators walked 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%.
They certainly weren’t big drops, suggesting investors believed Washington would eventually reach a deal — as it always has in the past. Fed Chairman Powell’s comments that interest rates may not 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, is traded on Friday 8/16. It is fairly close to its 52-week low, indicating stability and calm.
The major indexes actually had a good week. The S&P added 1.65% and the Nasdaq rose 3% for the week – their best performance since March.
Yet that was before McCarthy turned up the rhetoric on debt ceiling negotiations. The good news is that Biden will meet with McCarthy in person later today. The bad: There’s no telling how the negotiations will go.
Detours and divisions are perhaps inevitable when it comes to White House negotiations across the political spectrum. We can only have faith that the United States will not throw its own economy and the financial world into chaos. It’s a scenario that belongs on TV, not the real world.
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