Actions before commercialization: Congress avoided a crisis. Another looms
The US Treasury outlined the issues in a report released in 2013, another time the markets expressed serious concerns about the debt ceiling drifting.
“Credit markets could freeze, the value of the dollar could collapse, US interest rates could skyrocket, the negative fallout could ripple around the world, and there could be a financial crisis and recession. that could echo the events of 2008 or worse, ”he added. Trésor wrote.
Republicans want to force Democrats to go it alone in the budget reconciliation process, which only requires 50 votes.
The Biden administration’s huge infrastructure spending plans also remain in limbo, undermining investors’ expectations for further stimulus.
Take a step back: Wall Street is increasingly nervous, although there is still some optimism that Democrats and Republicans can strike a deal to prevent a US default.
In a survey of more than 90 customers in mid-September, Citi found that more than 60% of those surveyed expected the debt ceiling to be raised after October 1 but before the middle of the month.
“We assume a deal can be reached at the last minute again,” Commerzbank senior economist Bernd Weidensteiner said in a research note on Friday. “However, the politically confused situation and the tight schedule increase the risk of an accident.”
Markets will likely remain “nervous” until there is more clarity, according to Societe Generale strategist Stephen Gallagher.
“It’s more of a political strategy and a pool game that could go wrong but I hope not,” he said this week.
Stocks record their worst month of the year
The latest: The S&P 500 ended the month down 4.8%, its biggest drop since fears of Covid-19 erupted in March 2020. The high-tech Nasdaq Composite fell 5, 3%, while the Dow lost 4.3%.
The S&P 500 managed to make a small gain in the third quarter and remains nearly 15% higher this year.
But the feeling has changed. The CNN Business Fear & Greed Index is in “extreme fear” territory, having produced a less severe “fear” reading a week ago.
“Winter is coming – and the bears don’t hibernate,” Jan Lambregts, head of economics and global markets at RaboResearch, warned this week.
Remember: September is historically the worst month of the year for stocks, while October is known for the stock market crashes of 1929, 1987 and 2008. Yet, according to Ryan Detrick of LPL Financial, the fourth quarter, which starts Friday, produced the best S&P. 500 returns since 1950.
This makes it difficult to put too much stock in the calendar. What is clear, however, is that the markets are trying to overcome a growing list of headwinds. The result could be more volatility.
“The S&P 500 has now spent an incredible 317 consecutive trading days above its 200-day moving average, one of the longest streaks of all time,” Detrick said in a research note Thursday. “A [5% to] A 7% pullback could potentially occur at any time given that we haven’t had one for so long. “
‘Squid Game’ Pushes Netflix Stocks To All-Time High
The streaming service is capitalizing on the popularity of its hugely successful new South Korean thriller series “Squid Game”.
“It’s a very good chance that this is our greatest show of all time,” Netflix co-CEO Ted Sarandos said in an interview this week.
Setback: Netflix stocks had struggled to break through this year. The company said it lost 433,000 subscribers in the United States and Canada during the second quarter.
But Asia clearly represents a great opportunity (my CNN Business colleague Michelle Toh has written about this before). Netflix added more than one million new subscribers in the Asia-Pacific region between April and June.
YipitData, a research service, estimated that Netflix’s global downloads reached their highest levels of the year, fueled by activity in Asia related to the “Squid Game” in particular.
What it means: Expect Netflix to continue to pump money into international programming, a strategy that will help it grow outside of its increasingly competitive home market. Asia is undoubtedly a key element, but Europe is also on the radar following the buzz surrounding the French-language drama “Lupine”.
The Federal Reserve’s preferred inflation measure is released at 8:30 a.m. ET.
Also today: September’s ISM Manufacturing Index arrives at 10 a.m. ET.
Coming next week: Will Congress raise the country’s debt ceiling? The debate in Washington will remain a central point.