Tuesday, May 30, 2023

Why is it so important to agree on a debt ceiling (as soon as possible)

Dow Jones: why it is so important to reach a debt ceiling deal

They are down for five consecutive days, one week in the market instrument that the DOW JONES Ind. Average has marked in recent days, with several questions on the table, but one in particular is subject to the debt ceiling deficit agreement called. We are all waiting for the deadline to reach it, around June 1, but the market and its models are telling us something completely different: the economic pain due to political tension is more than high.

And it is also the fact that, in many ways, things are being encouraged very similar to those that happened in 2011, when the two parties reached a last-minute agreement. Finally, Wall Street took a little more than two months to recover from the supposed setback, as is now the case with values ​​falling clearly throughout the week, especially after the pending agreement between the White House and Congress next Monday, and that was not the case.

Another fateful event occurred in August of that year when the credit rating agency S&P downgraded it for the first time in its history and subsequently sent the indicators down, including the Dow Jones. Now, as we shall soon see, it is Fitch who gives the intent.

In its chart we see that the price of the Dow Jones moves with a weekly cut of more than 2%, which in the month advances above 1.5% and whose quarterly negative baggage barely reaches 0.74%. Even this year, it returns to the red numbers with cuts that slightly exceed 1% for selective American. With the list already below, clearly, the level is 33,000 points.

Dow jones annual development indicator

Dow Jones annual development indicator

That stone calculus that S&P put on the table in July 2011 when in the line of mental outlook is the one that caused another rating agency, in this case Fitch, to raise alarm: monitoring or mental, as we say in Spain, denying for the American AAA as the first step to the possible levels he does not agree to the assessment of his credit in the event that the legislators actually increase the readiness of the treasury to borrow money and prevent it from running away.

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This contributes to the immediate concentration of debt and equity, as we verify. Notices of the sailors of great consequence to the agreement before the so-called 10th day, on the 1st of June.

In terms of values, the week was marked because there are only three positive values: Chevron, Cisco Systems and Unitedhealth Gro with gains that slightly exceeded 2%. And during the month, technological values ​​continue to act, thanks to Salesforce, Microsoft, Apple and Cisco Systems.

Chevron's annual race listing

Chevron’s annual race listing

Already in the year, “Nasdaq” again stand out. Technological values ​​like Salesforce with growth of 57%, Apple, 32% or Microsoft of 30% since last January. The first value out of the sector is McDonald’s, which is advancing 8.5% a year.

As if the business of the market were not enough, the possibility that Hed’s delay does not become indefinite connects again, and the possibility that, after a new rise in June and a delay in July, in August, according to which the economic data evolves; The Federal Reserve will again consider a rise in rates, which will break the initial illusions of a drop in the price of American money in the second half of the year.

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com/
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